By Andrea Heisinger
New York, July 18 - Kroger Co. tapped Thursday's market for $1 billion of senior notes (Baa2/BBB/BBB) in two tranches, according to a source close to the trade and an FWP filing with the Securities and Exchange Commission.
A $600 million tranche of 3.85% 10-year notes sold at 99.958 to yield 3.855% with a spread of Treasuries plus 132.5 basis points. Initial talk was in the 137.5 bps area, plus or minus 5 bps.
The notes feature a make-whole call at Treasuries plus 20 bps until May 1, 2023, with a par call after that date.
The second part was $400 million of 5.15% 30-year bonds priced at 99.665 to yield 5.172% with a spread of 155 bps over Treasuries. Initial guidance was in the 160 bps area, plus or minus 5 bps.
There is a make-whole call at Treasuries plus 25 bps on the bonds until Feb. 1, 2043 and a par call after that date.
The notes feature a change-of-control put at 101%.
BofA Merrill Lynch, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC were the active bookrunners. Passive bookrunners were Citigroup Global Markets Inc. and RBS Securities Inc.
Proceeds will be used to repay commercial paper issued to fund repayment of long-term debt that matured in February and April and for general corporate purposes.
The Cincinnati-based grocery retailer was last in the U.S. bond market with an $850 million offering of notes in two parts on April 10, 2012. That sale included a 3.4% 10-year note priced at 150 bps over Treasuries and a 5% 30-year bond sold at Treasuries plus 190 bps.
| Issuer: | Kroger Co.
|
| Issue: | Senior notes
|
| Amount: | $1 billion
|
| Bookrunners: | BofA Merrill Lynch, U.S. Bancorp Investments Inc., Wells Fargo Securities LLC (active), Citigroup Global Markets Inc., RBS Securities Inc. (passive)
|
| Co-managers: | Fifth Third Securities Inc., BNY Mellon Capital Markets LLC, Mitsubishi UFJ Securities (USA), Inc., RBC Capital Markets LLC, PNC Capital Markets LLC, CastleOak Securities LP, Drexel Hamilton LLC
|
| Trade date: | July 18
|
| Settlement date: | July 25
|
| Ratings: | Moody's: Baa2
|
| Standard & Poor's: BBB
|
| Fitch: BBB
|
|
|
| 10-year notes
|
| Amount: | $600 million
|
| Maturity: | Aug. 1, 2023
|
| Coupon: | 3.85%
|
| Price: | 99.958
|
| Yield: | 3.855%
|
| Spread: | Treasuries plus 132.5 bps
|
| Call: | Make-whole at Treasuries plus 20 bps to May 1, 2023, par call after
|
| Price talk: | 137.5 bps area, plus or minus 5 bps (initial)
|
|
|
| 30-year bonds
|
| Amount: | $400 million
|
| Maturity: | Aug. 1, 2043
|
| Coupon: | 5.15%
|
| Price: | 99.665
|
| Yield: | 5.172%
|
| Spread: | Treasuries plus 155 bps
|
| Call: | Make-whole at Treasuries plus 25 bps to Feb. 1, 2043, par call after
|
| Price talk: | 160 bps area, plus or minus 5 bps (initial)
|
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