Anheuser-Busch Companies, one of worlds largest brewers, is actively considering entering an interest-rate swap on the back of a recent USD250 million 40-year bond offering. In the swap, Anheuser-Busch would look to receive a fixed rate equal to the 6.5% coupon on the bond and pay a floating rate, according to an official. Carlos Ramirez, spokesman, said the company has used interest-rate swaps in the past and always considers it a useful option.
The St. Louis, Mo.-based company is considering entering the swap now because of a recent tightening in swap spreads, which has been tied to corporate debt supply, according to an analyst who follows the company. He added that an influx of U.S. corporate debt, most of which is being turned into floating rate liabilities via interest-rate swaps, has created a demand to receive fixed and caused swap spreads to narrow. "Anheuser-Busch recognizes this and has decided it could be the right time to pull the trigger on an interest-rate deal before spreads come in any tighter," the analyst added. The company opted not to enter the swap immediately following the offering to gauge the Federal Reserve's action on interest rates. "It wanted to see if the Fed would raise rates, which it didn't. So it began to focus more on pursing the option," the analyst said.
Salomon Smith Barney and Banc of America Securities were the lead managers on the recent bond offering. The bonds have been rated A1 by Moody's Investors Service and A plus by Standard & Poor's.
