Takeda to Plan Biggest Japan Company Bond Offering Ever

(Bloomberg) -- Takeda Pharmaceutical Co. is planning what would be the biggest single-tranche Japanese corporate yen bond sale in an effort to extend its debt obligations following its $62 billion purchase of Shire Plc, according to people with knowledge of the discussions.

The drug maker is planning to sell as much as 500 billion yen ($4.6 billion) of hybrid notes in the fiscal year starting April 1, said the people, who asked not to be identified because the details are private. That would be the largest-ever public issuance of Japanese corporate bonds in the local market excluding private placements, according to Bloomberg-compiled data.

A spokeswoman for Takeda declined to comment.

Takeda’s takeover of Shire -- the largest announced global deal of 2018 -- vaulted it into the ranks of the 10 biggest drugmakers by sales, but also more than doubled the Japanese firm’s borrowing level. Takeda’s management has stressed the importance of maintaining its credit ratings at investment grade, and hybrid debt can help achieve that as ratings firms may view the bonds as having an equity component depending on their structure.

Takeda is looking to extend its debt maturities and is examining the sale of bonds that aren’t callable for the first six years, the people said. Takeda faces maturities as early as 2020 on euro-denominated debt sold last November to refinance part of the Shire acquisition, which was completed earlier this month.

S&P Global Ratings cut Takeda’s credit rating by one level to BBB+ after the deal closed, following 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.

Chief Executive Officer Christophe Weber has said he intends to move quickly on asset sales as part of its deleveraging plan, with the company laying out a scenario of a potential $10 billion in divestments.

The company is working with bankers on gauging interest for its emerging-market prescription and over-the-counter assets, which could go for about $3 billion, Bloomberg reported last week. It also detailed plans on Monday to dispose of a portfolio of real estate assets to an unnamed buyer.

Takeda shares rose 0.2 percent in Tokyo trading Monday, closing at the highest level since Nov. 13. The stock has surged 22 percent this month, after slumping 42 percent last year partly on concerns over the debt issue tied to the Shire purchase.

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