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Best corporate borrower: Bayer

Bayer is one of the biggest and best-known European corporates – anything it does makes a splash. It excels in its use of innovative methods to finance acquisitions while protecting its credit profile.

The world’s best borrowers in 2006

Bayer: building its business through clever use of debt markets

Corporate capital market activity has changed dramatically since the glory days of the European debt market at around the turn of the century. Then corporates piled on debt with vigour to finance M&A, but then came the downturn in credit and ever since investors and borrowers have been more careful. Bayer might have been highly acquisitive of late but it generally pursues a prudent debt management strategy aimed at ensuring flexibility. The company made two landmark trades during the past 12 months that mean that it stands out from the rest of the investment grade corporate sector. The first was the sale of €1.3 billion of hybrid bonds in July 2005. This was the biggest corporate hybrid and enjoyed textbook execution. The deal was a balance sheet strengthening operation designed to deal with its €2.4 billion acquisition of Roche-OTC. The rating agencies had voiced their concern that the healthcare and chemical company’s financials were stretched for its single A rating (A3/A – Moody’s and S&P).

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