Deutsche Post DHL exploits favorable capital market environment to lock in attractive long-term financing conditions
- Plan to raise a total of EUR 1 billion with two conventional bonds
- Capital will be used to refinance bond maturing in January 2014
- Group renews syndicated loan ahead of schedule; new term now runs until at least 2018
- CFO Larry Rosen: "Financial position further strengthened"
Deutsche Post DHL is taking advantage of the current favorable capital market environment for companies with strong credit ratings to lock in attractive long-term financing conditions. The Group is planning to place two conventional corporate bonds with a total placement amount of EUR 1 billion. The capital raised will be used to refinance a ten-year bond that will mature in January 2014. In addition, the Group has renewed the five-year EUR 2 billion syndicated loan that it agreed in 2010 with a consortium of national and international banks ahead of schedule and on more favorable terms. The new credit facility runs until 2018 with two additional extension options of one year each.
"Our very solid financial foundation gives us a high degree of flexibility and stability, allowing us to actively shape the Group's future at any time," said Deutsche Post DHL CFO Larry Rosen. "The step we are taking today further strengthens our sound financial position."
The Group plans to issue the bonds under its Debt Issuance Program, which has been in place since 2012. The program allows the company to issue bonds in customized tranches up to the agreed total amount of EUR 5 billion. Both the volume of the two issues to be placed on the market today and their precise terms will be based on market conditions. The plan is to issue two bonds with terms of between five and ten years in the total amount of EUR 1 billion.
Further improvement of the company's sound financial position
Additionally, by renewing the syndicated credit line ahead of schedule, the company has locked in a long-term secure and financially attractive liquidity reserve, further improving its sound financial position. The syndicate was formed in September 2013 amongst selected commercial banks, including Commerzbank, HSBC, Citi, and Deutsche Bank.
The company currently has a Moody's credit rating of Baa1 that was confirmed by the credit agency in August. At the same time, Moody's also reaffirmed its positive outlook for the Group, based on expectations that Deutsche Post DHL's business will continue its successful performance, and on its conservative financial policy and sound liquidity position. In addition, Fitch Ratings has awarded the company a BBB+ rating with a stable outlook as a result of the Group's financial stability and the exceptional market position its four divisions maintain in the global logistics business as well as in the German mail and parcel market.