Vonovia Plans to Issue EUR 1.3 Billion in Convertible Bonds
Vonovia SE, a leading German residential real estate company, has announced the issuance of convertible bonds worth EUR 1.3 billion. This measure could have significant effects on the capital market, particularly for investors and savers in the German-speaking region.
Details of the Convertible Bonds
- Number and Term of the Bonds: The issuance includes two series of convertible bonds. The Series A Bonds have a term until May 20, 2030, and amount to approximately EUR 650 million. The Series B Bonds run until May 20, 2032, and also have a value of about EUR 650 million.
- Interest and Conversion Premium: The Series A Bonds are zero-interest and have a conversion premium of 35% to 40%. They will be repaid upon maturity at 105.12% to 107.76% of the nominal value, corresponding to a yield of 1% to 1.5% if they are not converted. The Series B Bonds have an annual interest rate of 0.875% and a conversion premium of 40% to 45%. They will be repaid upon maturity at 104.60% to 108.41% of the nominal value, corresponding to a yield of 1.5% to 2.0% if they are not converted.
- Convertibility: Both bonds can be converted into up to approximately 32 million new and/or existing common shares of Vonovia.
Impact on the Capital Market
- Investors and Savers: The issuance of convertible bonds could increase investor interest in Vonovia, as they provide a flexible way to invest in the company. This could lead to increased demand for the bonds and potentially influence stock prices.
- Capital Structure and Refinancing: Vonovia plans to use the net proceeds from the offering for general corporate purposes, including refinancing existing debt. This could improve the company’s capital structure and reduce its financing costs.
- Market Dynamics: The issuance of convertible bonds of this magnitude could also influence the overall market dynamics, as it increases the bond supply in the market and may affect interest rates for similar bonds.
Timeline
The settlement of the bonds is expected to occur on or around May 20, 2025. The final terms of the bonds will be announced later.
Conclusion
The issuance of convertible bonds by Vonovia is a significant corporate news that could impact both the stock prices and the bond supply. It offers investors a flexible investment opportunity and could lower the company’s financing costs.