London, Nov 12 - Nestle, the world's biggest food group, has increased its syndicated loan to 6.5 billion euros ($9.75 billion), the company said on Thursday.
The 364-day revolving credit was increased from an original target of 4.75 billion euros after a strong response from lenders despite a drawn interest margin of 12.5 basis points (bps), which is the lowest seen in Europe this year.
Nestle raised around 7.5 billion euros in commitments from the market and chose to increase the loan in view of its announced accelerated share buyback programme, the company said.
The success of the transaction could prompt a refinancing round in Europe next year as treasurers seek to cut borrowing costs on loans that shot up in the wake of the credit crunch.
The size of the oversubscription raised also shows improved bank liquidity and banks' willingness to lend to top quality companies to protect ancillary business and their franchises, several bankers said.
The loan, which supports the company's global commercial paper programme, is expected to be undrawn and will pay lenders a commitment fee of only 4bps, bankers said.
Citigroup acted as active bookrunner. Banco Santander, Bank of America, Bank of Tokyo-Mitsubishi IFJ, Bayerische Hypo-und Vereinsbank, BNP Paribas, Credit Suisse, Deutsche Bank, HSBC, JP Morgan, Royal Bank of Scotland, Societe Generale and UBS joined the deal as bookrunners, the company said.
Many of the banks increased their commitments and a number of new lenders joined the deal, Nestle added.