Richemont emits bonds for 2-billion: this isn’t a pause, it’s a reset

Richemont emits bonds for 2-billion: this isn’t a pause, it’s a reset

Richemont emits bonds for 2-billion and adds liquidity to prepare for a long-term crisis caused by the pandemic. In other words, according to Johann Rupert, president of Swiss group Richemont, the situation we are in “isn’t a pause, it’s a reset”. “I’m very concerned about the global economy and concerned that many politicians are promising things that are not deliverable”, pointed out Mr. Rupert.

Richemont emits bonds for 2-billion
Richemont announced it placed bonds for 2-billion euro. A choice that follows the one made by Kering, which last May 6th emitted 1.2 billion-euro in bonds. Richemont’s 2 billion are split in 3 tranches: 500 million euro expiring in 2028 (with a rate of 0,75%), 850 million in 2032 (with a rate of 1,125%), 650 million in 2040 (with a rate of 1,625%).

Caution before anything else

“Even if Richemont has strong financials and adequate cash resources – explains Burkhart Grund, CFO of Richemont – we believe that caution to guarantee further liquidity is necessary to face the future moments of hardship”. Caution is mentioned by the president Johann Rupert over and over, though distant from the considerations made by other luxury groups, such as LVMH, which believes the recovery will be quick.

According to Rupert, there will be “grave economic consequence”, for a period that could (possibly) last for the next 3 years. “We are lucky because we had prepared for a recession. Covid-19 simply accelerated what would have eventually happened. Nobody can foresee when we will return to normal economic activity”.

Cash position

As reported by Bloomberg, Mr. Rupert assured that Richemont has enough liquidity to sustain the crisis, thanks to a net financial position of 2.4 billion euro and an ever more flexible business model. The position has been further strengthened by the 2-billion-euro of bonds emitted. Richemont’s stock price this year has decreased by 31%, while LVMH’s by 20% and Kering’s by 28%.

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