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Sappi sells eurobond at record low coupon 

To pay off a €250m bond due April 2018.

Sappi, the world’s largest producer of glossy paper, said it sold 450 million euro ($476 million) in bonds at the company’s lowest coupon on record to refinance existing debt.

The Johannesburg-based company will save about $25 million a year in interest charges after selling the debt at 3.375%, Sappi said in a statement on Friday. It will use the proceeds from the issue and bank facilities to pay off a 250 million-euro bond due April 2018, which carried a 6.625% coupon, and a $300 million note that matures a year later with a rate of 8.375%, the company said.

“The material oversubscription indicates strong support from the bond investor community, resulting in a historically low coupon for Sappi,” Chief Executive Officer Steve Binnie said in the statement.

Sappi refinanced its debt as the European Central Bank’s 1.1 trillion-euro stimulus plan bolsters Europe’s junk-debt market, pushing down borrowing costs for companies deemed to be risky. Sappi, whose paper outside South Africa is rated below investment grade, is reducing debt as it cuts costs and spends less on new plants.

©2015 Bloomberg News

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