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Siemens finances share buyback at record low rate

September 11, 2012

German industrial conglomerate Siemens has issued some €2.7 bn in bonds at the lowest interest rates ever obtained on the European bond market. The bonds, which were issued on 30 August at Monday’s value, will primarily be used to finance the firm’s share buyback programme, which was launched at the beginning of August. Siemens intends to repurchase up to €3 bn in company shares by the end of the year. As of last Friday, the company had already spent more than €1.1 bn 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 CFO Joe Käser. The bonds are being issued in four tranches. Two-year bonds with a volume of €400 m carry an interest coupon of 0.375%, while 7.5-year bonds with a volume of €1 bn offer investors an interest rate of 1.5%. 13-year bonds with a volume of £350 m carry an interest coupon of 2.75%. And investors will receive 3.75% interest per annum on 30-year bonds with a volume of £650 m.