Philips successfully prices offering of Notes for EUR 1 billion to be used for repayment of existing debt and to finance eligible green projects

Rhea-AI Summary

Philips (NYSE: PHG) has successfully priced a EUR 1 billion notes offering, split between EUR 500 million fixed rate notes due 2030 and EUR 500 million due 2035. The 2030 notes have a 3.250% coupon with a 3.281% yield, while the 2035 notes offer a 4.000% coupon with a 4.050% yield. The offering was well-received, with the 5 and 10-year tranches being oversubscribed by more than 3 and 4 times respectively. The proceeds will be used for general corporate purposes, repaying 2026 debt maturities, and financing eligible green projects under Philips' Sustainable Finance Framework. Settlement is scheduled for May 23, 2025, with listing planned on the Luxembourg Stock Exchange. Philips maintains strong credit ratings: BBB+ (S&P), Baa1 (Moody's), and BBB+ (Fitch), all with stable outlooks.

Positive

• Strong demand with 3-4x oversubscription for both tranches indicates robust investor confidence
• Maintains strong investment grade credit ratings from all major agencies (BBB+/Baa1)
• Proceeds will partially fund green projects, showing commitment to sustainability
• Proactive debt management by addressing 2026 maturities

Negative

• Increased debt load of EUR 1 billion adds to company's financial obligations
• Higher interest rates (3.25-4%) compared to historical rates increase debt servicing costs

Insights

Corporate Finance Expert

Philips successfully raised €1B through bond issuance with strong demand, improving debt profile while maintaining investment-grade ratings.

Philips has successfully priced a €1 billion bond offering split evenly between 5-year and 10-year notes. The 2030 notes carry a 3.25% coupon with a 3.281% yield, while the 2035 notes offer a 4.0% coupon with a 4.05% yield. These terms reflect current market conditions for investment-grade corporate debt.

The significant oversubscription levels—more than 3x for the 5-year tranche and 4x for the 10-year tranche—demonstrate strong market confidence in Philips' credit quality and future prospects. This robust demand enabled the company to secure relatively favorable pricing despite the current higher interest rate environment.

Strategically, this debt issuance serves multiple purposes: general corporate funding, refinancing upcoming 2026 debt maturities, and financing eligible green projects under their Sustainable Finance Framework. By proactively addressing the 2026 maturities, Philips is extending its debt maturity profile and reducing near-term refinancing risk.

The company maintains solid investment-grade credit ratings (BBB+ from S&P and Fitch, Baa1 from Moody's)—all with stable outlooks. This bond issuance is consistent with Philips' stated commitment to maintaining these ratings while optimizing its capital structure.

The green financing component aligns with increasing investor demand for sustainable investment opportunities and potentially broadens Philips' investor base while supporting its environmental initiatives—a prudent dual-purpose approach to corporate finance.

May 15, 2025

Amsterdam, the Netherlands – Royal Philips (NYSE: PHG, AEX: PHIA), a global leader in health technology, today announced the successful pricing of its offering of EUR 500 million fixed rate notes due 2030 and EUR 500 million fixed rate notes due 2035 (the “Notes”) under its European Medium Term Note (EMTN) program.

The net proceeds will be used for general corporate purposes, the repayment of 2026 debt maturities, and to refinance or finance any Eligible Projects as defined in Philips’ Sustainable Finance Framework.

The issue price for the Notes due 2030 is 99.859% with a Coupon of 3.250%, resulting in a yield of 3.281% and the issue price for the Notes due 2035 is 99.595% with a Coupon of 4.000%, resulting in a yield of 4.050%. The 5 and 10 year tranches were oversubscribed by more than 3 and 4 times, respectively.

Settlement and issue of the Notes is scheduled for May 23, 2025. Application has been made for the Notes to be listed on the Official List of the Luxembourg Stock Exchange and to be traded on the regulated market of the Luxembourg Stock Exchange.
 
Philips is committed to maintaining a strong investment grade credit rating. Currently, the company has a BBB+ rating by Standard & Poor's (stable outlook), a Baa1 rating by Moody's (stable outlook) and a BBB+ rating by Fitch (stable outlook). 

THIS PRESS RELEASE IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘SECURITIES ACT‘), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THERE IS NO INTENTION TO REGISTER ANY SECURITIES REFERRED TO HEREIN IN THE UNITED STATES OR TO CONDUCT A PUBLIC OFFERING OF SECURITIES IN THE UNITED STATES.

PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the “EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); or (ii) a customer within the meaning of Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

PROHIBITION OF SALES TO UK RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (the “UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended, the “EUWA”); or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (as amended, the “FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

In the UK, this press release is being distributed to, and is directed at, only (a) persons who have professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”); or (b) high net worth companies, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The Notes are available only to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Notes will be available only to or will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this press release or any of its contents.

Relevant stabilisation regulations including FCA/ICMA apply.

MiFID II and UK MiFIR professionals/ECPs-only

Manufacturer target market (MiFID II and UK MiFIR product governance) is eligible counterparties and professional clients only (all distribution channels).

For further information, please contact:
Michael Fuchs
Philips Global External Relations
Tel.: +31 6 1486 9261
E-mail: michael.fuchs@philips.com

Dorin Danu
Philips Investor Relations
Tel.: +31 20 59 77055
E-mail: dorin.danu@philips.com

About Royal Philips
Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health technology company focused on improving people’s health and well-being through meaningful innovation. Philips’ patient- and people-centric innovation leverages advanced technology and deep clinical and consumer insights to deliver personal health solutions for consumers and professional health solutions for healthcare providers and their patients in the hospital and the home. Headquartered in the Netherlands, the company is a leader in diagnostic imaging, ultrasound, image-guided therapy, monitoring and enterprise informatics, as well as in personal health. Philips generated 2024 sales of EUR 18 billion and employs approximately 67,200 employees with sales and services in more than 100 countries. News about Philips can be found at www.philips.com/newscenter.

Forward-looking statements
This release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. Examples of forward-looking statements include statements made about the strategy, estimates of sales growth, future EBITA, future developments in Philips’ organic business and the completion of acquisitions and divestments. By their nature, these statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these statements.

FAQ

What is the size and purpose of Philips' (PHG) May 2025 notes offering?

Philips offered EUR 1 billion in notes, split equally between 2030 and 2035 maturities, to fund general corporate purposes, repay 2026 debt maturities, and finance eligible green projects.

What are the interest rates for Philips' 2025 bond offering?

The 2030 notes have a 3.250% coupon (3.281% yield) and the 2035 notes have a 4.000% coupon (4.050% yield).

What are Philips' current credit ratings in 2025?

Philips maintains BBB+ ratings from both S&P and Fitch, and a Baa1 rating from Moody's, all with stable outlooks.

How was the market response to Philips' 2025 bond offering?

The offering received strong market interest, with the 5-year tranche oversubscribed by more than 3 times and the 10-year tranche by more than 4 times.