Stellantis Issues €3.665 Billion in Hybrid Bonds, Exhausting Authorization
Event summary
- Stellantis priced a €2.2 billion perpetual fixed-rate resettable hybrid bond tranche with a 6.250% coupon until June 16, 2031.
- An additional €1.8 billion tranche was issued with a 6.875% coupon until March 16, 2034.
- A £865 million tranche was also issued with an 8.250% coupon until September 16, 2032.
- The total issuance of €3.665 billion fully utilizes the €5 billion hybrid bond authorization approved by Stellantis’ Board.
- Settlement of the offering is scheduled for March 16, 2026.
The big picture
Stellantis’ hybrid bond offering demonstrates a continued reliance on capital markets to fund its transformation and ongoing operations. The size of the issuance, fully utilizing the existing authorization, indicates a significant need for capital. The high coupon rates, however, signal a more challenging financing environment for automakers facing substantial investments in electric vehicle technology and infrastructure.
What we're watching
- Cost of Capital
- The relatively high coupon rates (6.250%, 6.875%, and 8.250%) suggest increased investor risk premiums, potentially reflecting concerns about the automotive sector's transition to electric vehicles and the associated capital expenditure.
- Reset Risk
- The reset dates for the hybrid bonds will be critical; Stellantis’ financial performance and prevailing interest rates will determine whether the coupon rate will increase at those points, impacting future financing costs.
- Future Financing
- Having exhausted the existing hybrid bond authorization, Stellantis will need to secure new approvals for future capital raises, which could be subject to greater scrutiny given the current market conditions and the company’s debt load.
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