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Capital Markets

A Eurobond Deal Pays Off for Medtronic

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May 17, 2019

Significant savings for the medtech multinational as robust investor demand improves pricing. 

Flying EuroMedtronic’s debut eurobond offering this year underscores the significant savings in borrowing costs Europe continues to offer US multinationals. 

That takeaway and others emerged from the medical technology company’s presentation about its €7 billion deal at the Assistant Treasurers’ Group of Thirty (AT30) spring meeting in Denver, CO, sponsored and hosted by Chatham Financial. 

Only two book runners? Medtronic used just two book runners on the transaction, compared to the four or more typically involved in deals of this size. By limiting the book running group to two institutions the company ensured that all processes throughout the transaction would be closely coordinated and efficiently executed. The company carefully selected the firms via an extensive interview process to ensure that they worked as one team with the company’s interests their paramount concern.  

Get approval, hit the road. After getting approval to formally engage underwriters, Medtronic spoke with dozens of investors in five European cities during a four-day road show. Investors clearly liked what they heard. 

Monster demand. Proof of the road show’s success lies in the numbers. The order book peaked at €34.6 billion, the largest in history. 

Rock-bottom rates. In London, on March 4, 2019, Medtronic successfully priced the six-tranche offering. It included €2 billion of two-year fixed and floating-rate notes priced with a 0% coupon or with an implied negative yield. Bloomberg noted that pricing on the 12-year and 20-year tranches tightened 30 basis points between initial price talk and the final terms (coupons of 1.625% and 2.25% respectively). Medtronic is using proceeds from the deal to fund a USD debt tender and an upcoming maturity, realizing substantial annual savings. Another plus: the deal is leverage neutral.

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