Outlook 2020: Multi-billion-dollar tenders, exchanges lead liability management in 2019

By Wendy Van Sickle

Columbus, Ohio, Dec. 31 – A brewer brought a massive multi-note tender offer in the double-digit billions to lead an active year in liability management exercises in 2019.

The year also saw a few issuers paying repeat visits to the liability management table with multi-billion-dollar exercises each time and several large one-off forays from a plethora of issuers.

Anheuser-Busch starts strong

Leuven, Belgium-based beer maker Anheuser-Busch InBev SA/NV set the stage for a bustling year by cracking open a tender offer in January for $11 billion of notes from 12 series, which cap it expanded to $16.5 billion by the time the deal settled.

The high-grade issuer’s deal was structured in pools, each taking out notes due to mature in a specific year, ranging from 2021 through 2026.

The dealer managers for that tender were Barclays, BofA Merrill Lynch and Deutsche Bank Securities.

The tender and information agent was Global Bondholders Services Corp.

The bulk of the tender offer was funded by proceeds of a $15.5 billion six-tranche issue of notes due in six to 40 years.

Anheuser-Busch also issued several large simple calls for its notes during the year, including for the April 25 redemptions of all €750 million of its 2.25% notes due Sept. 24, 2020, all $1,249,451,000 of Anheuser-Busch InBev Worldwide Inc.’s 3.75% notes due 2022 and $315 million of Anheuser-Busch InBev Finance Inc.’s 3.3% notes due 2023; the Oct. 29 redemptions of all €1.75 billion of its 0.625% notes due 2020, all $2,449,067,000 of Finance’s 2.65% notes due 2021 and $525 million of Worldwide’s 2.5% notes due 2022; and the Nov. 12 redemption of $1,179,047,000 of 2.5% notes due 2022.

JPMorgan cash tender

On Aug. 20, New York-based financial services firm JPMorgan Chase & Co. made a late summer splash by announcing a cash tender offer to purchase any and all of $11.15 billion of its notes from five series, each due in 2020.

Holders tendered a total of $2,699,956,000 of notes under that offer by its Aug. 26 expiry.

J.P. Morgan Securities LLC was dealer manager for the offer. D.F. King & Co., Inc. was tender agent and information agent.

Petrobras holds tenders

Emerging markets issuer Petroleo Brasiliero SA (Petrobras) conducted sizable liability management transactions every few months.

In March, the Rio de Janeiro-based oil and gas company launched waterfall offers under which it accepted for purchase $1,859,033,000 and €368,598,000 of wholly owned subsidiary Petrobras Global Finance BV’s notes from nine series, as well as an any-and-all offer through which it took out a total of $1,471,411,000 of its 4 3/8% global notes due May 2023.

BNP Paribas Securities Corp., Banco Bradesco BBI SA, Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc. and Santander Investment Securities Inc. were lead dealer managers.

Global Bondholder Services was the information agent.

On July 1, the company announced a waterfall tender offer under which it would pay up to $3 billion to purchase notes from 11 series and a separate any-and-all offer for seven series. The company took in tenders topping $1.79 billion in the waterfall offer and of €222,416,000 and £252,512,000 notes in the any-and-all offer.

Banco Bradesco, BB Securities Ltd., BofA Securities, Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities and Scotia Capital (USA) Inc. were the dealer managers.

Global Bondholder Services was the information agent.

In September, the company launched two concurrent liability management transactions to purchase or exchange seven series of Global Finance’s outstanding notes.

Global Finance issued $4,115,281,000 principal amount of 5.093% global notes due 2030 and paid $2,786,406,212.79 in cash to settle the exchange.

In the cash tender offer, Global Finance paid $59,473,594.47 in cash as consideration for the tendered notes.

Dealer managers were Citigroup, Credit Agricole Securities (USA) Inc., HSBC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC and Santander.

Global Bondholder Services was the information, tender and exchange agent.

Verizon active

As in years past, Verizon Communications Inc. also conducted some hefty liability management offers in 2019.

In February, the New York-based telecommunications company launched an exchange offer for 19 series of debt securities issued by itself and by wholly owned subsidiary GTE LLC.

Verizon issued $4 billion of new 4.016% notes due 2029 to settle that exchange and ultimately returned to holders notes tendered from five of the series, due 2025 through 2035, because participation overshot the cap.

Global Bondholder Services was the information agent and exchange agent.

Then, in April, Verizon launched waterfall cash tender offers for 15 series of notes with an initial tender cap of $3 billion. That offer was oversubscribed by the early deadline, so Verizon increased the cap by half, accepting $4.5 billion of early tenders and turning away any tenders after the early deadline.

Citigroup, Goldman Sachs, Mizuho Securities and Wells Fargo were the dealer managers with Global Bondholder Services as information agent.

In October, Verizon announced a tender for 11 series of notes with a $4.6 billion payment cap and a separate tender offer to spend up to $500 million to repurchase 20 series of notes.

In the tender for 11 series, Verizon said it ultimately lifted the payment cap slightly, accepting all notes tendered under the offer.

In the offer for 20 series, Verizon expanded the cap quite a bit to $850 million, and ultimately paid slightly shy of the enlarged cap to settle that offer.

Citigroup, Credit Suisse, JPMorgan and Morgan Stanley were the lead dealer managers and Global Bondholder Services the information agent for each of the October tenders.

Liability potpourri

In a year that saw many multi-billion-dollar liability management offers, a few other notable exercises were held by Medtronic plc, Petroleos Mexicanos SAB de CV (Pemex) and General Electric Co., the latter two of which each launched $5 billion offers on Sept. 12.

Medtronic in June announced cash tender offers for up to $4,175,000,000 of notes from 14 series issued by subsidiaries Medtronic Inc., Medtronic Global Holdings SCA and Covidien International Finance SA. The offers were split into any-and-all and capped offers.

The Dublin-based medical technology and services company ultimately raised the cap to $5,525,000,000 after reporting early tenders of about $642 million in its any-and-all offer and about $7.95 billion in the capped offer.

Barclays, BofA and Goldman Sachs were the dealer managers. The information agent and tender agent was Global Bondholder Services.

As part of a spate of refinancing initiatives, Mexico City-based oil and gas company Pemex launched a tender offer for up to $5 billion of notes from 10 series on Sept. 12, which it followed up a day later with a separate $5 billion exchange offer for 15 series.

And Fairfield, Conn.-based industrial manufacturer General Electric began cash tender offers to purchase up to $2.5 billion of four series of dollar denominated notes and up to $2.5 billion equivalent of six series of euro-denominated notes on Sept. 12.

Each of General Electric’s dollar and euro offers was oversubscribed, resulting in the issuer returning all tenders from two series under each offer and scaling a third series under each offer.

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