Diageo secures US$1.5bn in bond deal, fueling future investment plans

The drinks giant taps the US debt market to fuel strategy and growth plans, signalling confidence despite recent market turbulence.  Diageo has raised US$1.5 billion through a two-part bond issue, in a move that suggests continued market confidence in the global drinks group. The company launched and priced the SEC-registered offering on 11 April, split evenly between two tranches: US$750 million of 5.125% fixed rate notes due in 2030, and US$750 million of 5.625% fixed rate notes due in 2035. The bonds were issued by Diageo Investment Corporation, with Diageo plc fully guaranteeing the payment of both principal and interest. Proceeds will be used for “general corporate purposes”, according to the group. The transaction is expected to settle on 15 April 2025. Backing from major banks The deal was backed by a consortium of major financial institutions. Barclays, BNP Paribas, BofA Securities, Deutsche Bank and Goldman Sachs acted as active joint book-running managers. RBC Capital Markets and Standard Chartered Bank were named as passive joint book-runners. Diageo’s decision to tap the bond market comes amid ongoing strategic investments and cost management across its global operations. The offering follows a similar US$2.5bn bond raise in May 2023, part of the group's ongoing approach to diversified funding. The company owns more than 200 brands, including Johnnie Walker, Guinness and Tanqueray, and operates in over 180 countries.

Long-term brand strength

The news follows comments made by Diageo CEO Debra Crew earlier this year, as the company moved to reassure investors following a dip in performance across key markets. In February, Crew highlighted the company’s underlying strength, pointing to its 13 billion-dollar brands and long-term growth potential. “We have 13 billion-dollar brands and are number one in international spirits and are one and a half times larger than our nearest international competitors”, she told a conference in Miami.

Analysts eye rebound

It also comes amid growing optimism in the wider alcohol sector. In March, db reported that major drinks stocks are expected to rebound in 2025. Analysists citied strong brand portfolios and improved cost efficiency. Diageo, along with Pernod Ricard and Constellation Brands, was singled out as well-positioned to benefit from recovering consumer demand and easing input costs.