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The company sold a EUR 500m tranche with a call at 5.5 years (25 June 2027) and a 4.625% yield (against initial price thoughts of 4.625% area). There is a 25bp coupon step-up on 25 September 2032 and a 75bp step-up on 25 September 2047. Final demand was around EUR 750m, according to Bond Radar (www.bondradar.com).

Also on the docket is a EUR 800m tranche with a call at 8.5 years (25 June 2030) with a yield of 5.50%, the tight end of 5.50%-5.625% initial price thoughts. There is a 25bp coupon step-up on 25 September 2035 and a 75bp step-up on 25 September 2050. Demand for the longer tranche was around EUR 1.3bn.

Proceeds will refinance the company’s EUR 1.3bn hybrid (originally issued in March 2015) whose call date comes up on 2 October 2022.

Scope affirmed Bayer’s ratings on 28 January 2022, noting the company’s still strong and partly protected business risk profile, especially with regard to our view that the profile of the underlying pharmaceutical and agrochemical industries is credit supportive.

Ratings are also supported by diversification, as Bayer combines a performing medium-sized pharmaceutical business with the world’s largest crop science company. The ratings are held back by the group’s strained financial risk profile following the Monsanto takeover in 2018, while uncertainty about pending legal disputes around alleged health risks connected to glyphosate is still significantly negative.

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