Published on 7/17/2017 in the Prospect News Investment Grade Daily.
New Issue: Kroger prices $1.5 billion of fixed-rate senior notes in three parts
By Cristal Cody
Tupelo, Miss., July 17 – Kroger Co. sold $1.5 billion of fixed-rate senior notes (Baa1/BBB/BBB) in three tranches on the tight side of talk on Monday, according to a market source and an FWP filing with the Securities and Exchange Commission.
Kroger priced $400 million of 2.8% five-year notes at 99.981 to yield 2.804% and with a spread of Treasuries plus 95 basis points. The notes were talked to price in the Treasuries plus 100 bps area, plus or minus 5 bps.
The $600 million tranche of 3.7% 10-year notes priced at 99.941 to yield 3.707% and a Treasuries plus 140 bps spread. Price guidance on the notes was in the Treasuries plus 145 bps area, plus or minus 5 bps.
In the final tranche, Kroger sold $500 million of long 30-year notes with a 4.65% coupon at 99.276 to yield 4.695%. The notes priced at a spread of 180 bps over Treasuries, compared to talk in the Treasuries plus 185 bps area, plus or minus 5 bps.
Mizuho Securities USA Inc., Goldman Sachs & Co., U.S. Bancorp Investments Inc., Citigroup Global Markets Inc., PNC Capital Markets LLC and Wells Fargo Securities, LLC were the bookrunners for the five-year notes.
Mizuho Securities, RBC Capital Markets, LLC, Wells Fargo, BofA Merrill Lynch, Fifth Third Securities, Inc. and MUFG were the bookrunners for the 2027 notes.
Mizuho Securities, BofA Merrill Lynch, Citigroup, BB&T Capital Markets, BNY Mellon Capital Markets, LLC and Santander Investment Securities Inc. were the bookrunners for the 2048 notes.
Proceeds will be used for a contribution to the company-sponsored defined benefit plan, to refinance long-term debt due August 2017 and for general corporate purposes.
Kroger is a Cincinnati-based grocery retailer.
| Issuer: | Kroger Co.
|
| Amount: | $1.5 billion
|
| Description: | Senior notes
|
| Trade date: | July 17
|
| Settlement date: | July 24
|
| Ratings: | Moody’s: Baa1
|
| S&P: BBB
|
| Fitch: BBB
|
| Distribution: | SEC registered
|
|
|
| Five-year notes
|
| Amount: | $400 million
|
| Maturity: | Aug. 1, 2022
|
| Bookrunners: | Mizuho Securities USA Inc., Goldman Sachs & Co., U.S. Bancorp Investments Inc., Citigroup Global Markets Inc., PNC Capital Markets LLC and Wells Fargo Securities, LLC
|
| Co-managers: | BofA Merrill Lynch, BNY Mellon Capital Markets, LLC, Fifth Third Securities, Inc., MUFG, RBC Capital Markets, LLC, Santander Investments Securities Inc. and Williams Capital Group, LP
|
| Coupon: | 2.8%
|
| Price: | 99.981
|
| Yield: | 2.804%
|
| Spread: | Treasuries plus 95 bps
|
| Call features: | Make-whole call at Treasuries plus 15 bps; on or after July 1, 2022 at par
|
| Price guidance: | Treasuries plus 100 bps area, plus or minus 5 bps
|
|
|
| 10-year notes
|
| Amount: | $600 million
|
| Maturity: | Aug. 1, 2027
|
| Bookrunners: | Mizuho Securities, RBC Capital Markets, Wells Fargo, BofA Merrill Lynch, Fifth Third Securities and MUFG
|
| Co-managers: | BB&T Capital Markets, BNY Mellon Capital Markets, Citigroup, Goldman Sachs, PNC Capital Markets, Santander Investments Securities, U.S. Bancorp and CastleOak Securities, LP
|
| Coupon: | 3.7%
|
| Price: | 99.941
|
| Yield: | 3.707%
|
| Spread: | Treasuries plus 140 bps
|
| Call features: | Make-whole call at Treasuries plus 25 bps; on or after May 1, 2027 at par
|
| Price guidance: | Treasuries plus 145 bps area, plus or minus 5 bps
|
|
|
| 30-year notes
|
| Amount: | $500 million
|
| Maturity: | Jan. 15, 2048
|
| Bookrunners: | Mizuho Securities, BofA Merrill Lynch, Citigroup, BB&T Capital Markets, BNY Mellon Capital Markets, LLC and Santander Investment Securities
|
| Co-managers: | Fifth Third Securities, Goldman Sachs, MUFG, PNC Capital Markets, RBC Capital Markets, U.S. Bancorp, Wells Fargo and CastleOak Securities
|
| Coupon: | 4.65%
|
| Price: | 99.276
|
| Yield: | 4.695%
|
| Spread: | Treasuries plus 180 bps
|
| Call features: | Make-whole call at Treasuries plus 30 bps; on or after July 15, 2047 at par
|
| Price guidance: | Treasuries plus 185 bps area, plus or minus 5 bps
|
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