Deutsche Börse refinances €600M of hybrid debt at 1.25% yield
Frankfurt Stock Exchange operator Deutsche Börse AG has announced that it has successfully placed a corporate hybrid bond in an amount of €600 million. The bond has a term of 27 years, with a first call date after 7 years and a coupon of 1.25% annually to the first call date.
Deutsche Börse thereby early refinances its outstanding €600 million hybrid bond ahead of its upcoming first call date. With the refinancing, the company achieves significant interest savings, as the new 1.25% instrument replaces the old bond with a coupon of 2.75%.
Supported by Deutsche Börse’s strong credit profile, the company said that the offer has attracted very high investor demand and was seven times oversubscribed.
The hybrid bond is considered as 50 per cent equity by the rating agency S&P and therefore supports Deutsche Börse’s credit rating and contributes to its financing capacity.
Hybrid bonds are considered partially equity for ratings purposed because they have a relatively long duration before investors can demand their money back (in this case 27 years), and because they come last in the debt pecking order, such that hybrid notes are subordinated to more senior bank and note debt in the event of a liquidation.
The new hybrid bond will be listed on the Regulated Market of the Frankfurt Stock Exchange as well as on the Luxembourg Stock Exchange.
In addition to the new issue, and to further optimize its cost base, Deutsche Börse also announced a tender offer to repurchase early the outstanding €600 million hybrid bond.