Siemens has issued some €2.7 billion in bonds at the lowest interest rates ever obtained on the European bond market. The bonds, which were issued on August 30 at today's value, will primarily be used to finance the company's share buyback program, which was launched at the beginning of August. Siemens intends to repurchase up to €3 billion in company shares by the end of 2012. As of last Friday, the company had spent some €1.1 billion for this purpose. "Our plan to swap expensive equity for historically cheap debt capital is being executed in grand style. The fixed interest rates we've obtained will ensure that we'll continue to profit from today's extremely favorable conditions over the long term," said Siemens CFO Joe Kaeser.
The bonds are being issued in four tranches. Two-year bonds with a volume of €400 million carry an interest coupon of 0.375 percent, while 7.5-year bonds with a volume of €1 billion offer investors an interest rate of 1.5 percent. Thirteen-year bonds with a volume of GPB350 million carry an interest coupon of 2.75 percent. And investors will receive 3.75 percent interest per annum on 30-year bonds with a volume of GBP650 million. These are the lowest interest rates that a company has ever obtained for euro- and sterling-denominated bonds with these maturities. Nearly two-thirds of the euro-denominated bonds went to German and French investors. British investors purchased more than 80 percent of the sterling-denominated bonds. All four tranches were rated A+ by Standard & Poor's and Aa3 by Moody's.