Underwriters price and hold $3.8 billion of H.D. Supply junk bonds

By Paul A. Harris

St. Louis, Oct. 2 - Market sources told Prospect News on Tuesday that underwriters have recently priced $3.8 billion of HD Supply, Inc. junk bonds (Caa1/CCC+) in two tranches.

Included are $2.5 billion of senior unsecured notes and $1.3 billion of senior subordinated payment-in-kind notes.

An informed source, who declined to furnish any information regarding issue prices, coupons or other details, said that the underwriters are holding the bonds for the time being.

The source added that the HD Supply guaranteed loan is going to launch soon.

Depending upon how the loan transaction goes, underwriters may elect to market the bonds, the source added.

JPMorgan is the left lead on the bonds, according to market sources, who added that Lehman Brothers and Merrill Lynch & Co. are also involved.

On Sept. 24 Banc of America Securities LLC set coupons and par issue prices on $2.348 billion of Biomet Inc. 10-year high-yield notes in three tranches, all of which were priced at the bridge caps.

Subsequent to pricing, at least some of those bonds were seen trading at discounts in the secondary market.

The informed source said that while the Biomet notes were distributed to a broader universe of buyers, consisting primarily of the bridge syndicate, the HD Supply notes are not yet trading.

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