Rheinmetall Returns to Bond Market After 16 Years While Shifting Skyranger Production to Germany

Rheinmetall plans a €500M bond and relocates Skyranger production to Germany to convert its €73B order backlog into revenue, amid rising NATO defence spending.

Rheinmetall is pursuing a two-pronged strategy to capitalise on its record €73 billion order backlog: the defence group is preparing its first conventional corporate bond in 16 years and relocating key production of its Skyranger air-defence system to Germany. Both moves underscore the urgency of converting a swollen order book into revenue and profit.

The Düsseldorf-based company is sounding out investors for a €500 million senior unsecured bond with a five-year maturity. Crédit Agricole CIB and UniCredit are acting as global coordinators, with Commerzbank, Deutsche Bank and Société Générale also on the placement side. Rheinmetall has not yet commented officially, so the coupon, yield and final demand remain open — but those details will signal how credit markets assess the defence contractor’s risk profile at a time of rapid expansion.

The last time Rheinmetall issued a conventional corporate bond was in 2010. In early 2023 it raised €1 billion via convertible bonds, partly to finance the acquisition of Expal. Now the group is turning back to straight debt to fund capacity expansion without diluting existing shareholders.

Parallel to the financing push, Rheinmetall is shifting parts of its Skyranger mobile air-defence production from Switzerland to Neuss in western Germany. Swiss export restrictions had hampered deliveries to certain client countries, while the existing facility in Oerlikon lacked the throughput needed to keep up with demand. The new centre in Neuss will house a modern series-production line designed to accelerate deliveries.

The move mirrors a broader strategic shift under chief executive Armin Papperger, who wants Rheinmetall to become a systems house rather than a components supplier. The company is expanding into cruise missiles and has teamed up with Deutsche Telekom to develop a drone-protection shield for civilian and military infrastructure. Air defence, drone countermeasures and long-range strike systems are all areas where NATO countries are ramping up spending.

Operationally, the first quarter saw revenue of around €1.9 billion (the exact figure varies slightly between €1.9 billion and €1.94 billion depending on the source) and an operating profit of €224 million. Management targets full-year revenue of up to €14.5 billion and an operating margin of roughly 19%, relying on economies of scale as new production lines come on stream.

Shareholders have already seen a tangible benefit: the annual general meeting on 12 May approved a dividend of €11.50 per share, up from €8.10 a year earlier.

Yet the stock remains under pressure. On Wednesday Rheinmetall shares traded at €1,234.60, gaining 2.46% on the day and 10.43% over the week. That recovery, however, leaves the stock down nearly 23% since the start of the year. The relative strength index at 93.2 points to an overheated short-term rally, while the share price is still 25.88% below its 200-day moving average.

The success of the bond offering will be a key test. A tight spread and strong demand would confirm that debt investors share management’s confidence in the growth trajectory. Hefty terms, by contrast, could signal wariness about the speed and cost of scaling up. For now, the market is watching both the financing and the factory floor — and betting that Rheinmetall can turn its massive backlog into cash.