Rolls-Royce launches about £1.99 billion three-part senior notes inside of talk, pricing Wednesday

By Paul A. Harris

Portland, Ore., Oct. 14 – Rolls-Royce plc launched approximately £1.99 billion equivalent of senior bullet notes (Ba3/BB-/BB+) in three tranches, according to market sources.

All three tranches launched inside of talk, and are expected to price by midday Wednesday.

Final details are as follows:

A €750 million tranche of notes due February 2026 launched 4 5/8% at par, inside of talk in the 4 7/8% area. Initial talk was 5% to 5¼%.

A downsized £545 million tranche of notes due October 2027 launched 5¾% at par, inside of talk in the 6% area. Initial talk was in the 6¼% area. The sterling-denominated tranche size decreased from £550 million.

A $1 billion tranche of notes due October 2027 also launched 5¾% at par, inside of talk in the 6% area. Initial talk was in the 6¼% area.

Prior to the late £5 million downsize of the sterling-denominated tranche the deal had grown to £2 billion equivalent from £1.5 billion equivalent after having previously having been upsized from £1 billion equivalent.

Joint global coordinator and joint bookrunner BNP Paribas will bill and deliver for the euro-denominated notes. Joint global coordinator and joint bookrunner Citigroup will bill and deliver for the dollar-denominated notes. Joint global coordinator and joint bookrunner Goldman Sachs will bill and deliver for the sterling-denominated notes.

The notes in all three tranches feature par calls three months prior to the respective maturities but are otherwise non-callable.

Proceeds, together with a rights issue, will be used to enhance liquidity headroom, for general corporate purposes and to repay upcoming maturities, including $500 million 2 3/8% notes due October 2020, €750 million 2 1/8% notes due June 2021 and £300 million of commercial paper due March 2021. The additional proceeds resulting from the £500 million upsizing of the deal will be used for general corporate purposes and may also be used to reduce any potential future increase in the United Kingdom Export Finance loan.

Rolls-Royce is a Manchester, England-based engineering company.

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