Creative transformation at WPP in bold bond refinancing
Published: Sep 2024
Best Funding Solution
Highly Commended Winner
WPP
Photo of Alex Ashby and Gemma Inzani, WPP and Philip Cohen, HSBC.
Alex Ashby
Group Treasurer
WPP plc is a United Kingdom-based creative transformation company. The company provides marketing communications services that help brands grow their businesses and operates in various countries, including the United States, the United Kingdom, Germany, Greater China, India, Brazil and Australia.
in partnership with
The challenge
UK advertising firm WPP applied its mantra of creative transformation to its own financing processes when it sold €1.25bn of debt in March 2024, successfully refinancing two bonds due to mature at staggered points through the year with a single transaction that showcased treasury’s brand of proactive liquidity management.
The solution
WPP took advantage of the exceptional market conditions to sell its largest bond offering after a one-day marketing campaign to garner support and pitch to over 90 global investors. The firm received in excess of €5bn of orders across two tranches (a five year and nine year) and achieved a blended coupon of 3.820%. WPP also outperformed peers, achieving a negative New Issue Premium, making it the company’s best execution in over a decade.
(HSBC, Bank of America, Commerzbank, ING, and NatWest Markets were involved in the issuance.)
The process was made more complicated by WPP’s treasury team running several internal workstreams that would also feed into the success of the issuance. Like updating its Euro Medium Term Note documentation programme, choreographed with banks, lawyers, auditors and listing authorities to ensure it did not delay execution of the bond issuance.
Elsewhere, WPP was also in the process of agreeing a new hedging policy with the board in response to the changing macro-economic environment. The new policy was agreed just prior to the announcement of the bond and executed shortly after.
Best practice and innovation
WPP’s roadshow spanned a wide range of investors, attracted by the company’s high-profile status in the market. The team were able to convert initial interest into a soft orderbook, before translating it into €5bn of demand.
Treasury set Initial Price Thoughts (IPTs) at a temptingly attractive level which allowed momentum to build but did not limit overall pricing ambitions. With the €5bn of orders, the company were able to move aggressively to achieve coupons of 3.625% on the five year and 4.000% on the nine year.
Key benefits
Return on investment (ROI).
Risk mitigated.
Future-proof solution.
Exceptional implementation (budget/time).
“By successfully refinancing two maturing bonds with a single transaction, our treasury team demonstrated proactive liquidity management. Leveraging strong market conditions and prior investor engagement, we garnered over €5bn in orders across two tranches making this execution stand as WPP’s best in over a decade.”
Alex Ashby, Group Treasurer
Bertie James
Debt Capital Markets, HSBC
WPP were faced with €R1.25bn of bonds maturing in the next 12 months, with the maturities split between September 2024 and March 2025.
This required proactive liquidity management and WPP returned to the bond market in March 2024 with a highly successful €1.25bn bond issuance – their largest ever transaction and a demonstration of the markets support for the credit.
HSBC acted as Active Bookrunner on the transaction, supporting the issuer in identifying the exceptional market conditions, supporting the company during the marketing exercise and assisting in delivering the company’s best execution in over a decade.
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The Adam Smith Awards are the industry benchmark for best practice and innovation in corporate treasury. The 2024 awards attracted 389 nominations. To find out more please visit treasurytoday.com/adam-smith-awards
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