By Paul A. Harris
Portland, Ore., May 27 – Macy's Inc. priced an upsized $1.3 billion of five-year senior secured notes (Ba1/BB-/BB+) at par to yield 8 3/8% on Wednesday, according to market sources.
Bookrunners were Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, BofA Securities Inc. and Goldman Sachs & Co. LLC.
The issue size increased from $1.1 billion.
The yield printed 12.5 basis points through the 8½% to 8¾% yield talk. Initial guidance was in the high 8% area to 9%.
Following the upsize, S&P Global Ratings lowered its rating on the issue by one notch, to BB- from BB, stating that the additional secured debt reduced the expected recovery value for the secured noteholders in S&P's simulated default scenario.
However, the upsize and resulting downgrade failed to significantly dampen investor demand for Macy’s 8 3/8% notes, according to one market source, who said that the $1.3 billion upsized deal played to $5.8 billion of investor demand.
The Cincinnati-based retailer plans to use the proceeds, including the additional proceeds resulting from the $200 million upsizing of the deal, to pay off its revolving credit facility.
| Issuer: | Macy’s, Inc.
|
| Amount: | $1.3 billion, increased from $1.1 billion
|
| Maturity: | June 15, 2025
|
| Securities: | Senior secured notes
|
| Bookrunners: | Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, BofA Securities Inc. and Goldman Sachs & Co. LLC
|
| Co-managers: | Wells Fargo Securities LLC, MUFG, U.S. Bancorp Investments Inc., Fifth Third Securities Inc., PNC Capital Markets LLC and Citigroup Global Markets Inc.
|
| Coupon: | 8 3/8%
|
| Price: | Par
|
| Yield: | 8 3/8%
|
| Spread: | 802 bps
|
| First call: | June 15, 2022 at 104.188
|
| Special call: | Up to 40% of notes until 120 days after issue date at 104.188 with proceeds from CARES act or similar laws related to coronavirus pandemic
|
| Equity clawback: | 40% at 108.375 until June 15, 2022
|
| Trade date: | May 27
|
| Settlement date: | June 8
|
| Ratings: | Moody's: B1
|
| S&P: BB- (lowered from BB following upsize)
|
| Fitch: BB+
|
| Distribution: | Rule 144A and Regulation S
|
| Price talk: | 8½% to 8¾%
|
| Marketing: | Roadshow
|
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