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Global hop market

A local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms. 

Hop Market in Russia

Germany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.

SABMiller Plans Biggest Bond Sale in U.S. in Two Years After Foster’s Deal

SABMiller Plc (SAB), the world’s second- biggest brewer by volume, issued $7 billion of debt in the largest U.S. bond sale since 2010 as it seeks to pay back debt tied to last year’s acquisition of Foster’s Group Ltd.

The company sold $1 billion of three-year notes, $2 billion of five-year notes, $2.5 billion of 10-year notes and $1.5 billion of 30-year bonds, according to data compiled by Bloomberg. London-based SABMiller last tapped the U.S. bond market in July 2008, when it issued $1.25 billion of bonds. At least $12.4 billion of corporate debt was sold or set to be offered today in dollars, the data show.

SABMiller’s purchase of the Australian Foster’s, valued at A$12.4 billion ($12.8 billion) and completed last month, is the biggest takeover of a brewer since InBev NV purchased Anheuser- Busch Cos. for $52 billion in 2008 to create No. 1 brewer Anheuser-Busch InBev NV. SABMiller had to sell bonds to refinance an $8 billion bridge loan used for the acquisition, CreditSights Inc. said in a Dec. 19 report. The purchase included $1.93 billion of net debt, Bloomberg data show.

SABMiller’s 1.85 percent, three-year notes yield 150 basis points more than similar-maturity Treasuries, the 2.45 percent, five-year debt paid a spread of 165 basis points, the 3.75 percent, 10-year notes yield 185 basis points more than similar- maturity Treasuries and the 4.95 percent, 30-year bonds pay 200 basis points more than benchmarks, Bloomberg data show. The 1.85 percent coupon was the lowest on record for the company, the data show.

Macy’s Rating
SABMiller sold $700 million of 6.5 percent, 10-year notes in its July 2008 sale at a 270 basis point spread, Bloomberg data show, showing that borrowing costs for the company have tumbled since then.

Macy’s Inc. (M), the Cincinnati-based department-store chain, also marketed bonds today for the first time since 2008 after regaining an investment-grade credit rating from Moody’s Investors Service yesterday, said a person with knowledge of the transaction.

The company sold $550 million of 10-year bonds at a spread of 200 basis points more than Treasuries and $250 million of 30- year debt with a 212.5-basis-point spread, said the person, who declined to be identified because the terms haven’t been published.

Moody’s stripped Macy’s of its investment-grade credit ranking in April 2009, citing a slowdown in consumer spending and a “sizeable” debt load.

Performance ‘Sustainable’
The ratings company raised Macy’s to Baa3 from Ba1 yesterday, saying the chain’s “solid operating performance is sustainable, as is our expectation for higher earnings going forward,” according to a note from analysts Margaret Taylor and Kendra Smith.

SABMiller’s sale is the largest since Feb. 4, 2010, when Kraft Foods Inc. sold $9.5 billion of debt and Warren Buffett’s Berkshire Hathaway Inc. issued $8 billion of bonds, data compiled by Bloomberg show.

Valspar Corp. (VAL), the producer of industrial paint, and the Hong Kong-based conglomerate Hutchison Whampoa Ltd. (13) also marketed debt today as yields on investment-grade corporate debt fell to 3.85 percent today, the lowest since Nov. 17, according to Bank of America Merrill Lynch index data.

Corporate bond sales in the U.S. climbed to $7.45 billion yesterday following $30.9 billion of issuance last week, Bloomberg data show.

13 Jan. 2012

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