Allison Transmission expected to place $500 million 10-year notes with low 6% area yield

By Paul A. Harris

Portland, Ore., March 25 – Allison Transmission Inc. is expected to attempt to place $500 million of 10-year senior notes (expected ratings: Ba3/BB) with a yield in the low 6% area, a market source said on Monday.

Citigroup Global Markets Inc. will lead the bond deal, which is expected to kick off during the late part of March or in early April, the source added.

The Indianapolis-based supplier of automatic transmissions and drive systems is also in the market with a $648 million seven-year senior secured amended and extended covenant-lite term loan B. Commitments for existing lenders were due on Monday. Commitments for new lenders are due Tuesday.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Fifth Third Bank, J.P. Morgan Securities LLC, BMO Capital Markets, Barclays, SMBC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and MUFG are the joint lead arrangers on the loan.

Proceeds from the loan and bonds will be used to help repay in full the company’s existing credit facilities, including a $1,148,000,000 term loan B.

Other funds for the refinancing are expected to come from the issuance of $500 million of senior notes due 2029 and cash on hand.

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