The drug-to-pesticides group priced the investment grade bond on Thursday last week, with the deal closing on Tuesday. — Reuters
NEW YORK: Bayer held a call with investors after a raft of bad news led some of them to question whether the German group had been upfront about its prospects ahead of a US$5.75bil bond issuance, three sources familiar with the situation say.
The bad news prompted some bond investors to question whether Bayer should sweeten the terms of the deal or outright pull it, one of the sources said on Wednesday.
The drug-to-pesticides group priced the investment grade bond on Thursday last week, with the deal closing on Tuesday.
Last Sunday, it was hit by a major drug development setback when it aborted a large late-stage trial testing a new anti-clotting drug that promised billions in revenue, acting on recommendation by an independent trial monitoring board.
Then in two separate lawsuits, Bayer was ordered last Friday to pay US$1.56bil to plaintiffs over its Roundup weed-killer, followed by another order on Monday to pay US$165mil to employees of a school north-east of Seattle.
“From our talks with clients, many are angry and seriously wondering whether Bayer rushed to bring the deal ahead of the news,” said Andrew Brady, CreditSights head of basic industries research, referring to investors.
A Bayer spokesperson declined comment.
The company’s bankers held a call with some of the top investors on Monday in a bid to placate them, two of the sources said.
On the call, the investors asked for clarity on whether the bad news would have material impact on the company’s earnings, one of the sources said.
The company told investors it had reserves to deal with Roundup litigation, and could not have predicted the jury verdicts, the source said.
It is rare for investment-grade bonds to be pulled after they have priced, according to the sources, who are market participants.
In March 2021, Nomura Holdings flagged a possible US$2bil loss at a US subsidiary, and shelved a hefty bond issuance.
Bayer priced bonds with maturities between three to 30 years.
It was the 10th largest investment grade bond deal by an industrial company this year and attracted more than US$22bil in orders, according to Informa Global Markets.
Citigroup, JP Morgan, SMBC Nikko Securities America and Wells Fargo were the bookrunners on the deal.
Citigroup and JPMorgan declined comment, while Wells and SMBC did not respond to a request for comment. — Reuters
