Deutsche Post Starts Talks With Banks for 1Billion Euro Loan

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Deutsche Post Starts Talks With Citigroup, Banks for First Loan

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Deutsche Post AG, the world’s biggest carrier of air and sea freight, opened talks with banks including Citigroup Inc. and Deutsche Bank AG to raise more than 1 billion euros ($1.4 billion) in its first syndicated loan.

Deutsche Post is also negotiating with Commerzbank AG and HSBC Holdings Plc to arrange the deal, said three people with knowledge of the deal, who declined to be identified because the talks are private.

“We’re looking at such a loan and it could well happen this year,” Chief Financial Officer Lawrence Rosen said on a conference call today, adding that it would be used to refinance debt coming due in 2012 and 2014. It’s too early to say which banks the company will hire to arrange the financing, which will exceed 1 billion euros, he said.

Europe’s largest postal service is diversifying its funding to replace more than 1.5 billion euros ($2.1 billion) of bonds. Deutsche Post has 1 billion euros of 4.875 percent bonds maturing in 2014 and 750 million euros of notes due in 2012, Bloomberg data show. The company is ranked BBB+ by Standard & Poor’s and Baa1 by Moody’s Investors Service.

Banks have cut interest margins to European companies rated between BBB+ and BBB- by Standard & Poor’s to 78 basis points this year from an average 142 basis points last year, according to Bloomberg data. A basis point is 0.01 percentage point.

Deutsche Post, based in Bonn, said today third-quarter net income was 226 million euros compared with a loss of 83 million euros a year earlier. Profit topped the 215 million-euro average estimate of five analysts compiled by Bloomberg.