(Bloomberg) -- Takeda Pharmaceutical Co. has filed to issue up to 500 billion yen ($4.5 billion) of notes in what would be corporate Japan's biggest ever bond if done in a single tranche.
The Osaka-based drug maker has taken on massive debt for its $62 billion takeover of Shire Plc, which vaulted it into the ranks of the 10 biggest drug makers by sales while more than doubling its borrowing level. Chief Financial Officer Costa Saroukos said at the company's earnings presentation on Feb. 1 that management doesn't intend to increase its debt load further, but may look to “optimize” the structure by refinancing certain borrowings.
Filing Details
- Takeda registered to sell a 60-year subordinated bond that can be called in about five years, according to a regulatory filing Friday.
- Mitsubishi UFJ Morgan Stanley Securities Co., SMBC Nikko Securities Inc. and Mizuho Securities Co. will underwrite the offering, according to the document.
- Takeda plans to use the proceeds from the planned bond sale to substitute for all or a part of a 500 billion yen loan commitment, none of which has been drawn at this stage, the company said in a separate statement Friday.
Key Background
- The drug maker's management has also repeatedly stressed the importance of maintaining an investment-grade credit rating, and hybrid debt can help achieve that as ratings firms may view the securities as having an equity component.
- S&P Global Ratings cut Takeda's credit rating to BBB+ after the deal closed last month.
- That followed a similar move by Moody's Investors Service. Both cited the high level of debt and concerns over whether Takeda would be able to deleverage fast enough as it integrated Shire's operations into its own.
--With assistance from Issei Hazama and Lisa Du.
To contact the reporter on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net
To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Finbarr Flynn, Ken McCallum
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