Coca-Cola Launches $4.5 Billion Bond Issue

By KATY BURNE

Coca-Cola Co. is in the market with its largest-ever bond sale: a four-part, $4.5 billion debt offering.

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European Pressphoto Agency

Baseball fans sit beneath a giant Coca-Cola bottle and glove during game two of the 2010 World Series.
.The offering consists of a $1.25 billion tranche of floating-rate notes and three tranches of fixed-rate notes: $1.25 billion of three-year notes, $1 billion of five-year notes and $1 billion of 10-year securities.

The company's second-largest and most recent issue was for $2.25 billion in five- and 10-year bonds in March 2009, according to data provider Dealogic.

Pricing offered on the floating-rate notes is 0.05 percentage point over the three-month London interbank offered rate, or Libor, and 0.32, 0.52 and 0.72 point over comparable Treasurys on the three-, five- and 10-year tranches, respectively. Orders are said to be in the range of $6.5 billion. The deal is slated to price Thursday afternoon.

The launch terms were inside of price guidance sent out earlier in the day, which was about 0.35, 0.55 and 0.75 percentage point over Treasurys, highlighting the draw for investors of the Coca-Cola name.

The three-year piece is widely believed to score the lowest nominal interest rate, or coupon, on record for debt of that maturity, said people familiar with the deal.

The three-year record is held by Wal-Mart Stores Inc., which sold $5 billion in debt last month with a coupon of 0.75%.

The five-year piece also may tie the record with that held by Colgate-Palmolive Co., which sold $438 million in debt last Friday with a 1.375% coupon. It was sold at a discount to face value to yield 1.532%, or 0.38 point over comparable Treasurys.

"This potentially could be at or through all-time lows," one investor said. "It's the No. 1 brand in the world."

Coca-Cola's bond sale in March 2009, when borrowing rates were higher, featured a coupon of 3.625% on the five-year piece and 4.875% on the 10-year piece, according to Dealogic.

Bank of America Merrill Lynch, Deutsche Bank Securities, Goldman Sachs Group Inc. and HSBC Holdings PLC are managing the sale, proceeds from which will be used to meet payments in connection with Coca-Cola's tender offer for outstanding debt. The balance should go toward general corporate purposes.

The bonds will be paid in full at maturity and are expected to be rated Aa3 by Moody's Investors Service and A-plus by both Standard & Poor's and Fitch Ratings.

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