First, from ZeroHedge, February 16:
When France's richest man, LVMH boss Bernard Arnault, shocked the market last November with his $16 billion purchase of jewelry icon Tiffany, he knew he would have to issue about $10 billion in bonds to fund the deal. He also knew it wouldn't be a problem, for one reason: the ECB would be there to make sure the deal got done. But not even Arnault, who expected the yield from the bond issuance to be "between 0% and 1%" anticipated that the deal would get done in a way that the bond market would end up paying him.And from Bloomberg:
Yes, thanks to the lasting legacy of one Mario Draghi, the richest man in France is now even richer because he had to issue debt.
What happened? As the financial world was closely following every fabricated data point out of Beijing in China's fight with the coronavirus epidemic, LVMH quietly raised €7.5 billion ($8.3 billion) and GBP1.55 billion ($2 billion), over a range of maturities from two to 11 years, to help finance its $16 billion purchase of Tiffany.
Here's the kicker: as Reuters reported last week, not only was the €9.3BN bond deal more than 50% upsized from the initial price talk of €6BN just earlier that day, but two of the five euro tranches were placed at negative yields, meaning investors would pay the A-rated LVMH to borrow money. Even the longest maturity, an 11-year euro tranche, had a yield of just 0.43%....MORE
Bernard Arnault is among a pack of potential bidders vying for London’s Ritz Hotel, according to the Times of London.Some previous visits to Cloud Cuckoo Land:
Europe’s richest man, chairman of LVMH Moet Hennessy Louis Vuitton SE, is among about 13 interested parties that have been allowed to undertake due diligence, the newspaper said. The five-star hotel is being sold by the Barclay brothers and could fetch as much as 800 million pounds ($1 billion).
Luxury brands have stepped up investments in high-end hotels in recent years, seeking to diversify their interests and deepen ties to the world’s wealthiest consumers. LVMH spent $2.6 billion last year to buy Belmond, which owns or has stakes in more than 30 properties around the world.
Representatives for LVMH and the Barclay brothers declined to comment.....MORE
....Related, the FT's David Keohane starring in:
Frontrun the Bank of England for Fun and Profit
Possibly also of interest:
"Which corporate bonds has the ECB been buying?"
Climateer Line of the Day: In With The In Crowd Edition
Frontrunning the ECB: "Investors in corporate bond ‘land grab’ ahead of ECB buying"--UPDATED
"The ECB’s momentous step into corporate asset purchases"
Deutsche Bank On the European Central Bank: We Are Governed By Idiots
Pictet: "The Pricing And Valuation Of Bonds No Longer Reflects Fundamentals" - Why This Matters
