CRH redeems most expensive bond, issues two new ones

Building materials group CRH redeemed its most expensive bond debt Tuesday as it issued two new US dollar bonds through its US unit, CRH America.

Ireland’s largest publicly quoted company said it was exercising an option to redeem in full the entire outstanding principal amount of its 8.125 per cent guaranteed notes due in 2018, of which over $287 million (€231 million) was outstanding.

Separately, CRH issued $1.5 billion in debt in two parts. The first, a $900 million 10-year bond, carried a coupon of 3.95 per cent while the second, a 30-year $600 million bond, carried a coupon of 4.5 per cent.

According to Davy analyst Robert Gardiner, the bond issue will likely part fund the acquisition of Ash Grove Cement and repay the guaranteed notes due in 2018.

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“The exercise again highlights the group’s financial strength with final pricing for the new issues coming in significantly better than initial indications,” Mr Gardiner said.

The Davy analyst highlighted the high level of demand leading to both bonds being issued 200 basis points below the initial pricing.

Commenting on the bond redemption, Mr Gardiner noted that the 2018 notes represented CRH’s most expensive debt on the public bond market with the next highest coupon 6.4 per cent on a $300 million bond raised in September 2003. The 2018 bond was originally issued as a $650 million bond in July 2008.

“In total, CRH’s average cost of fixed rate debt was 3.3 per cent at end-2017,” Mr Gardiner wrote in his note.