(CAT) Caterpillar Updates on Euro Bonds

Caterpillar Inc. (CAT) issued updates on the Euro bonds offered last week. These updates were related to the yield, spread and rating of the bonds. The borrower of the bonds is the financial wing of the company, Caterpillar International Finance Ltd, while the guarantor is Caterpillar Financial Services Corp.

The company offered €600 million bonds last week priced at €99.935, with a coupon rate of 2.75%. The settlement date for the offer is June 6, 2011, while the date of maturity is June 6, 2014.

The yield on the bonds is 2.773% while the spread is 42 basis points more than the German government bonds. The lead managers to the offer are Royal Bank of Scotland Group plc (RBS) and Societe Generale Group. Moody’s and S&P provided ‘A2 ‘and ‘A’ rating, respectively, to the offer.

Ever since the beginning of fiscal 2011, Caterpillar has issued notes totaling $1,750 million comprising four notes of $250 million, $300 million and $450 million in one lot and $750 million in a single tranch. This is the first time in fiscal 2011 when the company is issuing notes in Euro.

Caterpillar has a long record of issuing notes and also returning value to shareholders. During the first quarter of fiscal 2011, the company bought back shares for $17.815 million and $8.624 million.

During March, Caterpillar redeemed a total debt of $15.15 million, comprising six notes. Caterpillar’s reward to shareholders is determined by its huge cash balance and strong cash flow.

The company’s cash and cash equivalents amounted to $4.87 billion as of March 31, 2011, and cash from operating activities stood at $765 million in the first quarter of the current fiscal year.

Peoria, Illinois-based Caterpillar Inc. is the manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is one of the few leading U.S. companies in an industry that competes globally from a principally domestic manufacturing base. The company operates three divisions – Machines, Engines and Financial Products. Caterpillar competes with CNH Global NV (CNH), Komatsu Ltd. and Volvo AB.

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