British Retail Icon M&S Readies First Junk Bond in Upbeat Market
2020-11-10 15:06:39.219 GMT
By Irene García Pérez
(Bloomberg) — Marks & Spencer Plc is back in the debt
market for the first time since July 2019, but this time as a
high-yield issuer.
The downgraded British retailer has mandated banks to
arrange a series of investor calls from Tuesday, ahead of
issuing a sterling-denominated, senior unsecured bond with 5.5
years maturity, according to a person familiar with the matter
who isn’t authorized to speak publicly and asked not to be
named.
This will be the company’s first bond sale as a sub-
investment grade issuer. Standard & Poor’s and Moody’s cut the
retailer’s credit rating to one level below investment grade in
March. Fitch followed in April, as the pandemic added pressure
to its clothing and home divisions, only partially offset by
robust online and food sales.
The deal comes alongside an offer from the company to buy
back its 300 million pounds ($397.1 million) of notes due in
December 2021 for 106.25 pence on the pound, according to a
statement on Tuesday. The bonds are quoted at 105.8 pence,
according to data compiled by Bloomberg.
NatWest Markets Plc is acting as global coordinator for the
deals, as well as joint lead manager together with BNP Paribas
SA, MUFG Securities EMEA Plc and SMBC Nikko Capital Markets Ltd,
the company said in the statement.

Buoying market

M&S is joining a flurry of U.K. high-yield borrowers
selling debt this week, capitalizing on the upbeat tone of the
credit markets following the U.S. election and positive results
of the Covid-19 vaccine developed by Pfizer Inc. and BioNTech
SE.
Building materials firm Travis Perkins Plc and utility
company Thames Water Kemble Finance Plc announced sterling-
denominated deals on Monday. Both were announced before the
vaccine-related news, and they haven’t priced yet.
Also on Monday, British gym operator PureGym Group Ltd
announced it’s selling an euro-denominated bond. Initial price
talk on the bond was for a 5.5% coupon and a discount to face
value in the high 80% area, but the revised price talk on
Tuesday looked slightly better for the company with the discount
to face value in the 92-94 area, Bloomberg reported earlier.
“Issuers should tap the market because demand is very
impressive as we’ve seen from recent transactions from both euro
and sterling accounts,” Benjamin Sabahi, head of credit research
at Spread Research in Lyon, France, said by phone.