July 19, 2005
Bayer successfully completes refinancing
EUR 1.3 billion hybrid bond issued / Bayer repurchases bonds with a face value of around EUR 860 million
Due to legal restrictions the bond tender offer is expressly not addressed to
investors in the United States or Italy; further restrictions are detailed in
the Tender Offer Memorandum. The invitation to purchase the new bond issue to
be launched is not addressed to investors in the United States; further
restrictions are detailed in the Offering Memorandum.
Leverkusen - Bayer AG has successfully placed its previously announced
subordinated hybrid bond on the capital markets. The high demand from investors
exceeded the company's optimistic expectations. The order book had an
exceptionally high quality and totaled over EUR 5 billion. The issue volume was
therefore increased to EUR 1.3 billion and the order book was closed early.
Interest on the new hybrid bond was fixed at 180 basis points above the
ten-year swap rate and the coupon at 5 percent. It is the largest corporate
bond issue of this type ever placed in Europe.
The bond will mainly be used to finance the repurchase of part of the 5.375
percent Bayer bond due on April 10, 2007. The repurchase volume reached a face
value of around EUR 860 million and thus achieved the desired size. The
repurchase was therefore closed after the early tender period. Both
transactions were arranged by a bank consortium led by Deutsche Bank and J.P.
The new bond issue enables Bayer to benefit from the present favorable interest
rates and the high acceptance of Bayer securities on the capital market. The
bond also strengthens Bayer's rating: Rating agencies classify 100-year
subordinated hybrid bonds mainly as equity. Standard & Poor's long-term rating
for Bayer is "A", while Moody's gives it an "A3" rating (both with a stable
outlook). The bond itself is rated "BBB" (S& P) and "Baa2" (Moody's).