BAT sells second-biggest global bond issue of 2017

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New York - British American Tobacco sold the second-largest bond deal of the year to finance its purchase of the portion of Reynolds American that it didn’t already own.

BAT sold $17.25bn of dollar-denominated debt in eight parts, the longest of which is a 4.54% 30-year security that yields 1.7 percentage points more than Treasuries. That’s down from initial talk between 1.8 percentage points to 1.85 percentage points, according to a person with knowledge of the matter, who asked not to be named because the deal is private.

The proceeds will help permanently finance BAT’s £42bn purchase of the remaining shares of Reynolds, a deal that will propel BAT to the top position in tobacco-related products globally. The sale is one step in London-based BAT’s efforts to raise $25bn for the deal. It is hoping to sell euro and pound-denominated debt as well. AT&T Inc. sold $22.5bn of bonds two weeks ago that is the year’s biggest US dollar offering.

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