Entering text into the input field will update the search result below

Kinder Morgan sells first euro bonds

Mar. 09, 2015 7:15 PM ETKinder Morgan, Inc. (KMI) StockKMIBy: Carl Surran, SA News Editor20 Comments
  • Kinder Morgan (NYSE:KMI) sold its first-ever euro denominated bond today, issuing €1.25M of bonds divided into seven- and 12-year tranches, and orders exceeded €4.75M.
  • Yields on euro denominated bonds have fallen to record lows as the ECB has entered the market with bond buying program, and U.S. companies have piled in to take advantage; the boom in issuance reflects how U.S. companies are now able to sell eurobonds offering yields 1.5%-1.75% lower than they would have to pay on equivalent bonds issued in the U.S.
  • KMI priced the $750M seven-year tranche at 110 bps over the European benchmark mid-swaps and the $500M, 12-year tranche at 145 bps over mid-swaps.

Recommended For You

Comments (20)

Have a tip? Submit confidentially to our News team. Found a factual error? Report here.

Remember QE I, II, III--etc took lot longer than anybody thought in the USA--so it might take a really time in Europe before somebody takes away the punchbowl.
lfbill profile picture
Good management, good succession plan.
Gene Jaquet profile picture
Makes no sense. The world is littered with financial disasters created when companies borrow in foreign currencies to fund domestic assets, only to get wiped out when exchange rates jolt. Are you sure the euro won't go back to $1.20 or $1.30 in 7 or 12 years time? And all this to save pennies on what are already rock bottom interest costs...
Smarty_Pants profile picture
"Makes no sense. The world is littered with financial disasters created when companies borrow in foreign currencies to fund domestic assets, only to get wiped out when exchange rates jolt." - Gene Jaquet

They can hedge the Euro/$ in forex markets to mitigate that potential risk.
That's the thing - it's hard to imagine the huge currency risk could be hedged away cheaply, for the slight improvement in rates. It's one thing if you already do euro business, it's another thing if you don't. The hedge costs would be huge given where the euro is way down. Save 1.5% in interest while having up to 40% risk in rates?

This looks like a step to make the short term look better, but costly in the long run. Or it's just a bet that the euro will languish for longer than people expect. Either way, I'm not a fan.
DrP79 profile picture
This may indicate more shipping or other sales to Europe in the future.
hedge for the transatlantic pipeline TBA.
Uain53 profile picture
Lowering the cost of capital. I really appreciate my management team.
Sounds good to me..
Income Machine profile picture
These guys are so smart. Well done
romilar profile picture
Just when I thought the best niche business in energy couldn't do any more, I discover an extra spoon of icing on the cake....Rom
spdawley profile picture
Are they going to start building pipelines in Europe? Could be huge for the company.
Bous Investments profile picture
Kinder knows the markets well. They are always seeking pathways to increase cash flow. As a shareholder, I am very happy with the move. I wish that I could borrow a lot of euro's at a low interest rate.
darnoc111 profile picture
Let's hope that some of the E&P companies try this too.
Albert Alfonso profile picture
Those should be billions, not millions :)
Remind yourself of that in a few years when the euro isn't at 11 year lows. There's no free lunch. Dipping a toe in the water is fine, selling out on a crazy currency risk is not.
Dividend Pro profile picture
Very clever.
thefundamentals profile picture
Smart move. Once the EUR depreciated to $0.80 USD, KMI will save $$$ on its debt servicing.
surfgeezer profile picture
or, and that is the risk.
Debt servicing could get ugly also, the American dollar is already very strong. Betting on even more future strength is also risky.
I imagine demand will be high, if I lived in Europe I would want American infrastructure to park some cash.
7 and 12 years from now, the Euro likely will be higher representing an add-on to the current interest rate. If indeed the Euro continues to decline, it may represent an opportunity to call the bonds.

About KMI

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

Related Stocks

SymbolLast Price% Chg
Kinder Morgan, Inc.
TC Energy Corporation
Cheniere Energy, Inc.
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.