03.08.13
Avon may be emerging from economic malaise, but the world’s largest door-to-door cosmetics seller is taking on debt to do it. The company raised $1.5 billion in a four-part bond sale that included its first 30-year securities on record. The new bonds were rated BBB- by Standard & Poor's.
Avon sold equal $250 million portions of 6.95% debt due 2043 that yield 375 basis points more than similar-maturity Treasuries and 2.375%, three-year debentures that pay 200 basis points more than benchmarks, according to data compiled by Bloomberg. The company also issued equal $500 million portions of 4.6%, seven-year notes with a spread of 325 basis points and 5%, 10-year bonds that yield an extra 312.5.
Avon said that the bonds, along with cash on hand, will be used to repay debt and for general corporate purposes.Avon, with $3.2 billion of total debt, has $125 million of 4.625% bonds maturing in May, Bloomberg data show. The company had $1.2 billion of cash at year-end.