Rheinmetall AG has launched a €500 million ($580 million) bond sale, its first public debt offering in 16 years. The German weapons maker is marketing a five-year senior unsecured bond, marking a shift from its long history of operating without public debt. The timing signals growing appetite for defense-sector credit in Europe.

The bond is being priced around 100 basis points over mid-swaps, with that spread expected to tighten as investors place bids on Thursday. Despite keeping a clean balance sheet for years, Rheinmetall is turning to debt markets, likely to fund expansion or acquisitions in a period of heavy NATO spending commitments.

The €500 million issuance reflects booming demand for European defense names, fueled by Russia's war in Ukraine and new arms budgets. At roughly 100 basis points over swaps, the pricing is steep for a blue-chip industrial, but defense credit commands strong investor interest. The deal shows Rheinmetall is no longer content to stay debt-free.