Richemont bulks up balance sheet with bond sales


Richemont bulks up balance sheet with bond sales

Published Date: 2020-05-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Richemont bulks up balance sheet with bond sales

The luxury goods group says the additional capital will help it weather potentially tougher times while supporting business development.

Richemont has raised €2 billion (R40 billion) in bond sales in a move it says will help it weather Covid-19 and support the long-term development of its business. It is also taking advantage of ultra-low interest rates in the euro area.

The luxury goods group launched the bonds on Monday with three tranches maturing in 2028, 2032 and 2040 at interest rates ranging from 0.75% for the earliest maturity to 1.625% for the longest-dated note. In its inaugural euro-denominated bond issue two years ago, similarly-dated bonds carried coupons of 1% to 2%. It expected the notes to receive an A+ rating from S&P Global Ratings after the agency recently affirmed its rating and revised the outlook to negative from stable.

Richemont, which owns brands that include Cartier, Dunhill and Chloé, said the significant interest from investors was in recognition of its strong cash generation profile and its unique business model around its jewellery Maisons and its growing digital business.

Last week, the group halved its annual dividend after reporting an 18% decline in fourth-quarter sales, mostly due to weaker Chinese buying of its watches and jewellery following the outbreak of Covid-19. However, it said demand had been strong since its 462 boutiques in China reopened following the lockdown. It ended March with cash on hand of €2.4 billion.

Richemont's shares declined 0.1% to R101.64 yesterday.

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