Published on 4/27/2020 in the Prospect News High Yield Daily and Prospect News Investment Grade Daily.
New Issue: Kohl’s sells upsized $600 million 9.5% five-year notes at 99.99
By Paul A. Harris
Portland, Ore., April 27 – Kohl's Corp. priced an upsized $600 million issue of five-year senior bullet notes (Baa2/BBB-/BBB-) at 99.99 to yield 9.5% on Monday, according to market sources and an FWP filing with the Securities and Exchange Commission.
The Menomonee Falls, Wis.-based department store retailer increased the issue size from $500 million.
The yield printed well inside of initial guidance in the low-to-mid 10% area.
Bookrunners were Morgan Stanley & Co. LLC (bill and deliver), Goldman Sachs & Co. LLC and Wells Fargo Securities LLC.
The deal priced on the investment-grade syndicate desk but came in a high-yield style execution, talked at a yield as opposed to a spread, with the execution involving the participation of high-yield syndicate members, an informed source said.
The notes feature a 25 basis points per notch coupon step up triggered by ratings downgrades from Moody's Investors Service and S&P Global Ratings. The step-ups are capped at 200 bps. The step-ups fall away if ratings improve to Baa1/BBB+.
Kohl's intends to use the proceeds to repay debt under its asset-based revolver as well as for general corporate purposes.
| Issuer: | Kohl's Corp.
|
| Amount: | $600 million, increased from $500 million
|
| Maturity: | May 15, 2025
|
| Securities: | Senior notes
|
| Bookrunners: | Morgan Stanley & Co. LLC (bill and deliver), Goldman Sachs & Co. LLC and Wells Fargo Securities LLC
|
| Senior co-managers: | BofA Securities, Inc., J.P. Morgan Securities LLC, U.S. Bancorp Investments, Inc., MUFG, BMO Capital Markets Corp. and TD Securities (USA) LLC
|
| Co-managers: | Capital One Securities, Inc., Fifth Third Securities, Inc., HSBC Securities (USA) Inc., BNY Mellon Capital Markets, LLC, PNC Capital Markets LLC, Comerica Securities, Inc. and Siebert Williams Shank & Co., LLC
|
| Coupon: | 9.5%
|
| Price: | 99.99
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| Yield: | 9.5%
|
| Call protection: | Make-whole call Treasuries plus 50 bps until April 15, 2025, then callable at par, otherwise non-callable
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| Trade date: | April 27
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| Settlement date: | April 29
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| Ratings: | Moody's: Baa2
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| S&P: BBB-
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| Fitch: BBB-
|
| Distribution: | SEC registered
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