The Long and Short
Seasoned JAB Holdings bonds for relative value
This material is a Marketing Communication and does not constitute Independent Investment Research.
Despite a relentless flow of new issuance, spreads continue to bump along the bottom of the all-time tights, with little to no volatility in cash markets over the past several weeks. With limited spread available in new issue, seasoned bonds in the long end of the curve present unique opportunities for relative value. JAB Holdings paper is on that list.
Long-dated paper issued by consumer products and food and beverage conglomerate JAB Holdings BV (JABHOL: Baa1/BBB) offers compelling spread relative to similarly rated peers and at low dollar prices relative to recent new issue 30-year paper (Exhibit 1). While the issuer’s diversification is unique relative to pure-play food and beverage comparables, and contains a growing insurance component, the bonds trade closer in-line with low ‘BBB’ credit in that part of the curve for a mid-to-high ‘BBB’ ratings. Furthermore, with total yield well in excess of 6%, these less liquid issues should fit a lot of active buy programs seeking those benchmarks. Though the private nature of the issuer presents some opacity, current valuation more than compensates investors relative to the publicly reporting entities within the food and beverage sector.
Exhibit 1. JABHOL long-dated bonds vs pure-play Food/Beverage IG comparables
Source: Santander US Capital Markets LLC, Bloomberg/TRACE G-spread indications only
JAB Holdings BV is the debt issuing finance subsidiary of the ultimate parent company JAB Holdings Co Sarl, and all debt is fully guaranteed. The Luxembourg-based conglomerate is privately held, with approximately 90% of ownership remaining with the descendants of the founding Reimnann family. The 2052 maturity bonds are unique in that they are sustainability-linked notes with a 25 bp step coupon feature if specific targets are not met. The only other JABHOL bonds with similar features were issued in Euro-denominated notes.
The company has generated attention in recent months with the closing of the sale of their majority (67.7%) stake in JDE Peet’s to Keurig Dr. Pepper (KDP), which was completed at the end of April. The estimated proceeds to JABHOL were roughly $12.5 billion, with Bloomberg reporting the total transaction value at $19.5 billion with equity value at $15.5 billion.
Before the transaction, JABHOL’s assets under management in consumer products were estimated at approximately $39 billion as of year-end 2025, while the growing insurance assets under management (Prosperity) were approximately $33 billion. The remaining consumer brand holdings after the JDE Peet’s sale will be Coty (51.8% ownership), Pret A Manger (80%), Panera Bread (91%), Caribou (91%), Petcare GP (38.3%), Krispy Kreme (45%), and JAB Pet Services (35.1%) with a split of an 84% stake in IPH and a 69% stake in Pinnacle Pet Group.
JABHOL maintains a small (4.4%) stake in KDP after the sale of JDE Peet’s. The company will reportedly book a $6 billion gain on the transaction. Management intends to use a large portion of the proceeds to reduce debt at the Acorn Holdings BV intermediate holding structure, which had already reportedly been reduced to about $4 billion as of last year from as much as $11.6 billion as of year-end 2019.
According to both Moody’s and S&P, the sale will put JABHOL at a net cash position from its prior net debt position reported to be around $6.5 billion and drastically reduce the loan-to-value of the remaining portfolio of assets. Cash holdings prior to the sale were estimated at about $4.4 billion as of year-end 2025. The trade-off from a creditor’s perspective is the loss of the consistent dividend stream from the sold-off assets. The remaining dividend from the KDP stake is estimated to be fairly negligible at about $54 million annually.
In addition to the net cash position provided by the JDE Peet’s sale, JABHOL boasts a solid liquidity position highlighted by the company’s smooth debt maturity profile over the near-to-intermediate term. JABHOL has a $688 million debt maturity due this year, $1.67 billion due next year, and $592mm due in 2028. The company has a $2+ billion revolving credit facility available through 2028. There are only 3 USD debt maturities outstanding, and management has not issued USD debt since 2022, while Euro-denominated issuances were made in 2025 and 2024.
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