Sale of $10 Billion Junk Debt Completed -- WSJ
March 19 2019 - 03:02AM
Dow Jones News
By Sam Goldfarb
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 19, 2019).
Banks on Monday completed the largest sale of speculative-grade
debt so far this year, allocating to investors more than $10
billion of bonds and loans to help fund the private-equity buyout
of Johnson Controls International PLC's automotive-battery
business.
Power Solutions, the world's largest maker of automotive
batteries, sold roughly $3.7 billion worth of secured and unsecured
bonds, denominated in both dollars and euros, along with around
$6.5 billion in loans, also split between euro and U.S. dollar
tranches, several investors said.
Meeting strong demand from investors, banks last week were able
to cut the expected yields on all pieces of the debt package,
underscoring the resurgence of the speculative-grade market in
recent months following a sharp downturn at the end of last
year.
Among the multiple debt offerings, Power Solutions on Monday
issued $1 billion of secured bonds due 2026 at par with a 6.25%
coupon and $1.95 billion of unsecured notes due 2027 at par with an
8.5% coupon.
Investors had expected the sale to be finished Friday, but were
told it had been pushed to Monday because banks were still putting
the finishing touches on the transaction at the end of the workday
in London.
Unusually for such an in-demand deal, prospective buyers were
able to modestly strengthen the package of investor protections
accompanying the debt. Yet the result, some investors said, still
gives the company's owners ample room to pay themselves dividends
and remove collateral from the business, in keeping with a broad
trend toward weaker protections.
JPMorgan Chase & Co. was the lead underwriter for the
secured dollar bonds and loans, while Barclays PLC led marketing of
the euro debt and Credit Suisse Group AG was the lead underwriter
of the unsecured dollar bonds.
Johnson Controls, an industrial and technology conglomerate with
headquarters in Cork, Ireland, announced in November it was selling
Power Solutions to a Brookfield Business Partners LP group for
$13.2 billion in cash. The deal is expected to close by June
30.
Write to Sam Goldfarb at sam.goldfarb@wsj.com
(END) Dow Jones Newswires
March 19, 2019 02:47 ET (06:47 GMT)
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