Lanxess issues first hybrid bond

Specialty chemicals company Lanxess today successfully issued a hybrid bond with a volume of 500 million euros on the European capital market. The proceeds of the transaction are to be used for the financing of the planned acquisition of US-based chemical company Chemtura.

“The fact that the order books were multiple times oversubscribed shows that the capital market has also accepted our first hybrid bond extremely well and with an attractive coupon for Lanxess,” said Michael Pontzen, Lanxess AG chief financial officer.

The first hybrid bond ever issued by LANXESS has a term of 60 years and a coupon of 4.5 per cent. It will be listed on the Luxembourg Stock Exchange in denominations of 1,000 euro nominal value. The specialty chemicals company can exercise the first regular redemption option in June 2023. The hybrid bond is subordinate to Lanxess’ other financial liabilities.

“With the three bonds issued since September, we have quickly secured the financing for the planned acquisition of Chemtura. In line with our solid financing strategy, we were always focused on sustaining our investment-grade rating,” said Oliver Stratmann, head of Treasury and Investor Relations at Lanxess. The hybrid bond was designed in such a way that 50 per cent is treated as equity by the rating agencies.

The transaction was supported by a bank consortium comprising J.P. Morgan, Barclays, Deutsche Bank and Bank of America Merrill Lynch.