GDF Suez in 2.5-bn-euro bond issue, including rare zero-coupon bond
French energy giant GDF Suez said it sold four tranches of debt Wednesday for a total value of 2.5 billion euros ($2.7 billion), including a rare zero-coupon bond.
"The coupons for each tranche are the lowest obtained by GDF Suez at these maturities in euros. In particular, the two-year tranche bears a zero-percent coupon," the group said in a statement.
The Wall Street Journal called the launch of the zero-coupon two-year bond "a true rarity" and said GDF Suez was the first company in over 14 years to issue bonds in euros offering no regular payments to investors.
The move comes as bond yields have slipped into negative territory ahead of a massive quantitative easing programme announced by the European Central Bank.
The ECB is on Thursday expected to unveil details of the initiative, which will see the central bank buy 60 billion euros of bonds public and private bonds each month for 18 months.
The GDF Suez sale offered a 500-million-euro 20-year bond that will pay interest of 1.5 percent and a 750-million-euro bond maturing in March 2026 with a coupon of 1.0 percent.
A 750-million-euro bond maturing in March 2022 with a coupon fixed at 0.5 percent and a 500-million-euro two-year bond with a zero-percent coupon were also offered.
"The average coupon of the issue is 0.75 percent and the average maturity is 9.8 years," the statement said.
"This transaction shows the investors' trust in GDF Suez signature," the group's CEO Gerard Mestrallet added.
"It is aligned with the strategy of dynamic management of the GDF Suez balance sheet and allows the group to secure its refinancing needs in exceptionally favourable market conditions currently prevailing in the eurozone."
Unlike regular bonds, zero-coupon bonds do not see any interest payments made to the bondholder.
Instead, the bondholder receives the face value of the bond at maturity, gaining on the difference between what they originally paid for the bond and the amount received at maturity.
© 2015 AFP