Bloomberg News

Dr Pepper Snapple Group Sells $500 Million Bonds to Repay Debt

November 13, 2012

Dr Pepper Snapple Group Inc. (DPS:US) sold $500 million of bonds in two parts to retire $450 million of maturing debt.

The soft-drink maker with less debt relative to earnings (DPS:US) than Coca-Cola Co. (KO:US) and PepsiCo Inc. (PEP:US) issued equal $250 million portions of 2 percent, senior unsecured notes maturing in January 2020 to yield 110 basis points more than similar- maturity Treasuries and 2.7 percent bonds due November 2022 with a 115 basis-point spread, according to data compiled by Bloomberg.

Proceeds from the offering will be used to refinance its 2.35 percent securities due next month, the Plano, Texas-based company said today in a regulatory filing.

Dr Pepper Snapple’s $250 million of 3.2 percent bonds due in 2021 traded at 103.6 cents on the dollar Nov. 5 to yield 2.74 percent with a 105 basis-point spread, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The company’s $2.8 billion of total debt as of Sept. 30 is 2.1 times its trailing 12-month earnings before interest, taxes, depreciation and amortization, Bloomberg data (DPS:US) show. That compares with 2.61 at Coca-Cola and 2.36 at PepsiCo, which both have higher ratings and market capitalization at least 11 times larger than Dr Pepper Snapple.

The new bonds may be rated Baa1 by Moody’s Investors Service, three levels above speculative grade, according to a person familiar with the offering who asked not to be identified because terms aren’t set. Coca-Cola and PepsiCo are both ranked Aa3.

To contact the reporter on this story: Charles Mead in New York at cmead11@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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Companies Mentioned

  • DPS
    (Dr Pepper Snapple Group Inc)
    • $62.92 USD
    • 0.43
    • 0.68%
  • KO
    (Coca-Cola Co/The)
    • $41.72 USD
    • 0.09
    • 0.22%
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