Continental AG made $959 million (750 million euros) from the sale of a new bond. The funds will go to pay off an early redemption on a higher interest debt, according to a report by Bloomberg.
The new notes, due July 2018, are fixed at 3%, Continental said in a statement, adding it will use the proceeds to assist with buying back 1 billion euros of 7.5% securities.
“We managed to use the positive capital-market environment to reduce our interest costs and further improve our debt maturity profile at the same time,” CFO Wolfgang Schaefer said. “The significant oversubscription again is a sign of confidence by the investors.”
The new bond conditions represent the lowest borrowing costs for Continental since it re-entered the bond market in 2010.
Before the sale, Continental paid a 4.5% coupon on a $950 million bond in September 2012.
Continental said it will buy back another 1 billion euros of securities paying a coupon of 7.5%. This bond will be repaid on Sept. 16, four years ahead of its maturity date. The company also plans to repurchase 750 million euros of 8.5 % bonds starting on July 15.
The bond redemptions are part of a broader effort by the company to improve its financial profile, including refinancing a 4.5 billion-euro loan in January, Bloomberg reported.
