Ruble Plunge Sends Recovering Carlsberg Bonds Back to Square One

By Publications Checkout
Ruble Plunge Sends Recovering Carlsberg Bonds Back to Square One

Carlsberg's hopes of finally getting some good news out of Russia seem not to be panning out.

After a rally in the ruble earlier this year buoyed Carlsberg’s bonds, the currency has plunged back to lows last seen five months ago. The timing is proving particularly unfortunate as Carlsberg has traditionally relied on its Russian beer sales peaking in the summer.

"Carlsberg is to some extent back to square one,” Rickard Hellman, a credit analyst at Nordea Bank AB, said in an interview. “The ruble is today still stronger than it was in the beginning of 2015, but it’s a lot weaker than the historical average of past years.”

On a 12 May conference call, Chief Financial Officer Joern. P. Jensen said a decision on whether to raise Carlsberg’s full-year outlook for Russia hinged on the ruble’s performance over the coming months. “Let’s see how it plays out over the summer,” he said then.

So far, it’s not played out well. The ruble weakened about 10 per cent in July, its worst month since December. It has lost about one-fifth of its value against the euro since a 2015 peak on 15 April. Russia isn’t Carlsberg’s only weak spot. According to Sydbank, the brewer saw a decline in western European volumes last quarter.


Jim Daniell, a Carlsberg spokesman, said the company wasn’t able to comment, citing its quiet period before publishing second-quarter results on 19 August.


Since the beginning of May, Carlsberg’s 2.5 per cent €1 billion 2024 bond has delivered investors an almost two per cent loss. A 1.875 per cent €1 billion SABMiller note due 2020 returned 0.35 per cent over the same period. The spread between the Carlsberg bond’s yield and the implied government yield curve has widened to about 123 basis points from a 2015 low of 107 basis points on 26 May 26. At one point in July, it was as wide as 138 basis points.

News by Bloomberg, edited by ESM