Roche is issuing a jumbo high-grade bond to take out a chunk of its US$20.3bn bridge facility that is supporting its considerable share repurchases from Novartis.
The Swiss pharmaceutical firm was looking to land a three-part senior unsecured bond on Monday via bookrunners BNP Paribas, Citigroup, Deutsche Bank and JP Morgan.
Roche marketed a seven-year, 10-year and a 30-year, in keeping with the theme of growing longer-dated issuance in the primary market as the yield curve flattens. Leads offered price thoughts at 75bp, 85bp and 105bp over Treasuries, respectively.
Rated Aa3/AA/AA, Roche was last in the primary market in March when it borrowed at the shorter-end of the credit curve, issuing US$1.5bn of three-year and five-year notes.
Competing pharmaceuticals firm Novartis had kept an equity stake in Roche for around two decades, amounting to a third of the Swiss drugmaker's shares. Novartis completed the sale of the stake on Monday.
Roche had signed the bridge loan in early November for the repurchases. Bringing the debt financing to the market this month meant lead bookrunners for the facility would not have to carry the risk on its balance sheet into next year.
After the share repurchase, Roche's leverage is set to rise to 1.4 times, from 0.6 times at the end of the first half 2021, according to CreditSights.
But bondholders are expected to grant the pharmaceuticals company leeway on the substantial cash expenditure, as Roche has historically avoided share buybacks, instead leaning on dividends to divert cash to shareholders. The company's rich cash flows meant the impact of the repurchases on Roche's leverage were "manageable," said CreditSights analysts.
The company generated US$36.7bn of sales in the first nine months of this year.