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.
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.
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%.