OneMain gets lowest coupon for first social bond ever from BB- issuer

By Devika Patel

Knoxville, Tenn., June 23 – OneMain Holdings, Inc. garnered the lowest coupon ever by a BB- issuer for its recent issue of 3½% social bonds due Jan. 15, 2027, which were the first-ever social bonds issued by a high-yield company.

Management intends to allocate proceeds from the bonds to serving “credit insecure and credit at-risk” communities, directing 75% of those funds to women and minorities.

“In May, we issued our first transaction of 2021 with a six-year ABS deal at 1.6% and we just completed yesterday, we actually closed on a six-year social bond which was about 3½% coupon and the first-ever social bond by a high-yield issuer,” executive vice president and chief financial officer Micah Conrad said at the Jefferies Virtual Consumer Conference on Wednesday.

“That was of particular importance to me and the company.

“I think the social bond’s going to highlight our commitment to serving lower-income consumers in what the Federal Reserve Bank in New York defines as ‘credit insecure and credit at-risk zip codes’ and, further, about 75% of those proceeds are going to be directed to minorities and women.

“We’re really proud of that transaction and we did it at, for a BB- issuer, the lowest coupon in history,” he said.

On June 15, OneMain Finance Corp. priced an upsized $750 million issue of senior notes due Jan. 15, 2027 (expected ratings Ba3/BB-//Kroll: BB+) at par to yield 3½% in a drive-by.

The issue size increased from $500 million.

The yield printed at the tight end of yield talk in the 3 5/8 area. Initial guidance was in the high 3% to 4% area.

The notes are structured in accordance with OneMain's recently published social bond framework.

Lead bookrunner BNP Paribas Securities Corp. billed and delivered. Additional lead bookrunners were Citigroup Global Markets Inc. and Mizuho Securities USA Inc., and joint bookrunners were R. Seelaus & Co. Inc., Samuel A. Ramirez & Co. Inc., Siebert Williams Shank & Co. LLC and Academy Securities Inc.

Other bookrunners were RBC Capital Markets LLC, Deutsche Bank Securities Inc., Barclays, Citizens Capital Markets Inc., Goldman Sachs & Co. LLC, NatWest Markets Securities Inc., Regions Securities LLC, SG Americas Securities LLC, Truist Securities Inc. and HSBC Securities (USA) Inc.

The Evansville, Ind.-based financial services holding company earmarked the proceeds to finance or refinance a portfolio of new or existing personal loans that meet the eligibility criteria of the social bond framework.

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