LVMH set to raise $10 billion-plus from bond markets for Tiffany deal

By Abhinav Ramnarayan

LONDON (Reuters) - Louis Vuitton owner LVMH is poised to raise a larger than expected 9.3 billion euros ($10.2 billion) from bond markets on Wednesday to help to finance its purchase of U.S. jeweller Tiffany & Co..

The company is also set to achieve an extremely attractive funding rate with a portion of the debt likely to carry a negative yield, by Reuters calculations, potentially providing encouragement for other companies planning acquisitions.

LVMH and Tiffany announced in November that the French luxury goods giant had agreed to acquire the U.S.-listed jeweller for $135 a share in a transaction that valued Tiffany at about $16.2 billion.

The French group was set to sell 7.5 billion euros of euro-denominated bonds of varying maturities and 1.55 billion pounds (1.8 billion euros) of sterling-denominated bonds, one of the lead managers of the bond issue said on Wednesday.

That comfortably exceeds the minimum target of 6 billion euros communicated to the market earlier in the day.

The extra funding was made possible by hefty demand as investors submitted more than 20 billion euros of orders for the euro tranches and 3.65 billion pounds for the sterling tranches, the lead manager added.

The final pricing on one of the fixed-rated bonds, a four-year euro note, has been set at 22 basis points over mid-swaps, which suggests a yield of -0.07%, according to Reuters calculations based on current Euribor levels.

Many of the other tranches will also carry very low yields, with the longest bond - 11-year euro paper - expected to price at a yield of 0.43% based on Reuters calculations.

Unprecedented European Central Bank stimulus has powered the market for bond issuance this year, with a large chunk of the European corporate bond market trading with negative yields.

Final pricing on the LVMH bonds is expected later on Wednesday.

Global coordinators are Bank of America Merrill Lynch, Credit Agricole, Citi, Deutsche Bank, HSBC, Natixis and Societe Generale.

($1 = 0.7701 pounds)

(1 euro = 0.8475 pounds)

(Reporting by Abhinav Ramnarayan; Editing by Kevin Liffey and David Goodman)