By Paul A. Harris
Portland, Ore., April 23 – The Gap, Inc. priced an upsized $2.25 billion amount of senior secured notes (Ba2/BB) in a three-part Thursday drive-by, according to market sources.
The deal included $500 million of three-year notes that priced at par to yield 8 3/8%, tight to talk in the 8½% area and well inside of early guidance in the 9% area.
A downsized $750 million amount of five-year notes priced at par to yield 8 5/8%. The tranche was downsized from $1 billion. The yield printed at the tight end of yield talk in the 8¾% area and well inside of early guidance in the 9¼% area.
An upsized $1 billion tranche of seven-year notes priced at par to yield 8 7/8%. The tranche size doubled from $500 million. The yield printed at the tight end of yield talk in the 9% area. Initial guidance was in the 9½% area.
The overall deal, which was upsized from $2 billion, was playing to $3 billion of orders early Thursday afternoon, according to a bond trader, who added that much of the deal was done by means of reverse inquiry.
The San Francisco-based retailer of clothing and accessories plans to use proceeds to refinance its 2021 notes, to pay off its revolving credit facility and for general corporate purposes.
| Issuer: | The Gap, Inc.
|
| Amount: | $2.25 billion, increased from $2 billion
|
| Securities: | Senior secured notes
|
| Left lead bookrunner: | Morgan Stanley & Co. LLC (bill and deliver)
|
| Joint bookrunners: | BofA Securities Inc., J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC
|
| Co-managers: | HSBC Securities (USA) Inc., SMBC Nikko Securities America Inc. and U.S. Bancorp Investments Inc.
|
| Trade date: | April 23
|
| Settlement date: | May 7
|
| Ratings: | Moody's: Ba2
|
| S&P: BB
|
| Distribution: | Rule 144A and Regulation S for life
|
| Marketing: | Drive-by
|
|
|
| Three-year notes
|
| Amount: | $500 million
|
| Maturity: | May 15, 2023
|
| Coupon: | 8 3/8%
|
| Price: | Par
|
| Yield: | 8 3/8%
|
| Spread: | 811 bps
|
| Call protection: | Non-callable
|
| Price talk: | 8½% area
|
|
|
| Five-year notes
|
| Amount: | $750 million, decreased from $1 billion
|
| Maturity: | May 15, 2025
|
| Coupon: | 8 5/8%
|
| Price: | Par
|
| Yield: | 8 5/8%
|
| Spread: | 825 bps
|
| Call protection: | Two years
|
| Price talk: | 8¾% area
|
|
|
| Seven-year notes
|
| Amount: | $1 billion, increased from $500 million
|
| Maturity: | May 15, 2027
|
| Coupon: | 8 7/8%
|
| Price: | Par
|
| Yield: | 8 7/8%
|
| Spread: | 839 bps
|
| Call protection: | Three years
|
| Price talk: | 9% area
|
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