PepsiCo sells €1 billion in bonds after profit cut

PepsiCo entered Europe's public bond market on Friday with a two-part debt offering worth €1 billion ($1.12 billion). The transaction came a day after the company reduced its earnings growth forecast due to climbing costs in North America.

The bond sale is evenly divided into two tranches of €500 million each, with maturities of three years and nine years. Initial pricing guidance stood at around 60 basis points above mid-swaps for the three-year tranche and about 105 basis points over mid-swaps for the nine-year tranche, according to a person familiar with the transaction.

The borrowing follows pressure across PepsiCo's North American operations, where weakness spans both drinks and snacks. Beverage sales volumes in the region fell 3% so far this year, though zero-sugar and flavored varieties performed better than full-sugar versions. CEO Ramon Laguarta told analysts on Thursday that the company does not feel good about the beverage unit and is focusing all corporate urgency on lifting soft-drink performance.

This marks PepsiCo's second euro bond issue of the year, managed by Deutsche Bank and HSBC. U.S. corporate debt issuance in Europe has climbed past €140 billion this year, driven by reverse Yankee sales from companies such as Alphabet, Danaher and Baker Hughes.