Daimler raises 850 million pounds in bond sale

By Daisy Ku

LONDON (Reuters) - German carmaker Daimler (DAIGn.DE) sold a 3-year 1 billion euro bond (850 million pounds) on Monday, paying sharply higher interest costs than it did for a similar bond three months ago.

Daimler sold the 3-year bond, with a coupon of 9.0 percent, at 99.519 percent of face value to yield 600 basis points over mid-swaps, the lead managers said. It paid a spread of 110 basis points over swaps for a 1.5 billion euro 3-year bond on August 28.

The new bonds yielded 9.16 percent at reoffer, an official at one of the lead managers said, compared with 5.91 percent for the previous sale, according to Thomson Reuters data.

The bond issue comes as auto sales slump amid a weakening global economy. The global financial crisis, which has intensified since the collapse of Lehman Brothers in September, has also sharply raised borrowing costs.

The car and truck maker, via its unit Daimler International Finance BV, mandated BNP Paribas (BNPP.PA), HSBC (HSBA.L)(0005.HK) and UniCredit (CRDI.MI) to lead the issue.

Daimler International Finance is rated A3 by Moody's and A- by Standard & Poor's.

The carmaker's cash, which stood at 12.9 billion euros at the end of 2007, dropped sharply to 6.7 billion by the end of the third quarter this year. Morgan Stanley analysts expect Daimler to register negative industrial cashflow, including working capital, of 369 million euros in 2008 and 2.8 billion in 2009.

Daimler's five-year credit default swaps were quoted at 475/545 basis points, a trader said, marginally wider than Friday but with no trading registered.

(Editing by James Dalgleish)