PepsiCo sells $4 billion of bonds; Michael Kors, Fannie Mae price; credit spreads firm

By Cristal Cody

Tupelo, Miss., Oct. 5 – PepsiCo Inc. led deal action in the high-grade market on Thursday with a $4 billion three-tranche offering of notes.

Also, Michael Kors (USA), Inc. tapped the primary market with a $450 million offering of seven-year guaranteed senior notes.

In other issuance on Thursday, Fannie Mae priced a $2 billion offering of five-year notes.

The Markit CDX North American Investment Grade 29 index firmed more than 1 basis point to end at a spread of 53 bps.

In the secondary market on Thursday, PepsiCo’s existing notes were mixed with the longer-dated notes about 3 bps to 4 bps softer, a source said.

PepsiCo prices $4 billion

In the PepsiCo offering, the company sold $4 billion of notes (A1/A+/) in three tranches, according to an FWP filing with the Securities and Exchange Commission.

The $1.5 billion of floating-rate notes due Oct. 15, 2018 priced at par and a coupon of Libor plus 0 bps.

PepsiCo priced $1 billion of 2% senior notes due April 15, 2021 at 99.98 to yield 2.006%, or a spread of Treasuries plus 38 bps.

The company also sold $1.5 billion of 3% senior notes due Oct. 15, 2027 at 99.717 to yield 3.033%. The notes priced with a Treasuries plus 68 bps spread.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and BofA Merrill Lynch were the bookrunners.

The Purchase, N.Y.-based food and beverage company intends to use the proceeds for general corporate purposes, including to repay commercial paper.

Michael Kors sells notes

Michael Kors (USA) priced its $450 million sale of 4% seven-year guaranteed senior notes (Baa3/BBB-/BBB-) at 99.508 and on the tight side of guidance at a spread of Treasuries plus 190 bps, according to a market source and a press release.

The notes were initially guided in the Treasuries plus 225 bps area with talk later tightening to the 200 bps area, plus or minus 10 bps.

J.P. Morgan Securities LLC and Goldman Sachs were the bookrunners for the Rule 144A and Regulation S deal.

The notes will be guaranteed by parent company Michael Kors Holdings Ltd. and existing and future subsidiaries that guarantee debt or are borrowers under its new $2 billion senior credit facilities.

Proceeds will be used to fund the company’s acquisition of shoe maker Jimmy Choo plc.

Michael Kors (USA) is a New York-based designer and manufacturer of clothing, accessories and footwear.

Fannie Mae raises $2 billion

Fannie Mae priced a $2 billion offering of 2% five-year benchmark notes on Thursday at 99.934 to yield 2.014%, according to a news release.

The notes due Oct. 5, 2022 priced with a spread of 8 bps over Treasuries.

Goldman Sachs, Nomura Securities International, Inc., TD Securities (USA) LLC and Williams Capital Group, LP were the bookrunners.

Fannie Mae is a mortgage credit provider based in Washington, D.C.

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