Deutsche Börse successfully places €600m hybrid bond at yield of 1.25%

Maria Nikolova

The bond has a term of 27 years with a first call date after 7 years.

Deutsche Börse AG on Monday announced that it has successfully placed a corporate hybrid bond in an amount of EUR 600 million. The bond has a term of 27 years with a first call date after 7 years and a coupon of 1.25 per cent annually to the first call date.

Deutsche Börse early refinances its outstanding EUR 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 per cent instrument replaces the old bond with a coupon of 2.75 per cent. The offer has attracted very high investor demand and was 7 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. On June 8, 2020, Standard & Poor’s assigned its ‘A+’ long-term issue rating to Deutsche Boerse AG’s (DB1’s) proposed subordinated hybrid notes. S&P explains that it arrived at the ‘A+’ issue rating on the proposed notes by notching down from the ‘aa’ group credit profile (GCP). The two-notch differential reflects S&P methodology for rating hybrid capital, under which S&P deducts:

  • One notch for subordination because S&P long-term rating on DB1 is investment grade (that is, higher than ‘BB+’); and
  • An additional notch for payment flexibility, to reflect that the deferral of interest on the notes is optional.

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 EUR 600 million hybrid bond.

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