Gap expected to price $1.5 billion two-part senior notes on Tuesday

By Paul A. Harris

Portland, Ore., Sept. 13 – The Gap, Inc. plans to price $1.5 billion of senior notes (expected ratings Ba3/BB) in two tranches on Tuesday, according to market sources.

The Rule 144A and Regulation S for life deal was set to kick off on a Monday conference call with investors.

The offering includes eight-year notes callable after three years at par plus 50% of the coupon, with initial guidance in the low 4% area, and 10-year notes callable after five years at par plus 50% of the coupon, with initial guidance which has them pricing 25 basis points behind the eight-year notes.

Citigroup Global Markets Inc. is the left bookrunner. BofA Securities Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the joint bookrunners.

Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America Inc., U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC are the co-managers.

The San Francisco-based clothing and accessories retailer plans to use the proceeds plus cash from its balance sheet to refinance debt.

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