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Morning Commentary: Michael Kors preps new notes to fund Jimmy Choo takeover; PepsiCo on tap
By Cristal Cody
Tupelo, Miss., Oct. 5 – Michael Kors (USA), Inc. prepared early Thursday to bring a Rule 144A and Regulation S offering of guaranteed senior notes (Baa3/BBB-/BBB-) to the primary market after the company held investor calls on Tuesday.
J.P. Morgan Securities LLC and Goldman Sachs & Co. are the bookrunners for the deal.
Michael Kors will use the proceeds to fund its acquisition of shoe maker Jimmy Choo plc.
Also in the deal pipeline, PepsiCo Inc. is offering fixed-rate senior notes via BNP Paribas Securities Corp., BofA Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs.
Financial market activity otherwise was mostly quiet with a focus on Friday’s September jobs report, a source said.
Secondary volume up
Secondary trading has picked up over the week with $20.3 billion of investment-grade bonds traded on Wednesday, compared to $18.79 billion on Tuesday and $14.63 billion on Monday, according to Trace.
At the start of Thursday’s session, PepsiCo’s last offering of bonds (A1/A+) that priced in the spring were mixed in trading, a source said.
The 2.25% notes due May 2, 2022 traded at 100.22, modestly softer from where the notes went out on Wednesday at 100.26.
The company sold $750 million of the 2.25% notes at 99.798 to yield 2.293%, or a spread of Treasuries plus 48 basis points, on April 27.
PepsiCo’s 4% bonds due May 2, 2047 improved to 104.22 early Thursday. The notes last traded in the previous session at 103.64.
PepsiCo sold $750 million of the 30-year notes in the April 27 offering at 99.567 to yield 4.025%, or Treasuries plus 105 bps.
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