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By Abhinav Ramnarayan
LONDON, Oct 30 (Reuters) - British luxury carmaker Aston
Martin has increased the yield on offer for its $1.1
billion junk bond sale to around 10.5%, according to a lead
manager on the deal, making it one of the highest-yielding bond
issues in Europe this year.
The loss-making company earlier this week announced the
sterling and dollar bond sale as part of a wider financing
package and set initial yield expectations at "high" 8%-9%.
The sterling tranche on the Aston Martin deal has been
cancelled and the deal is set to price later today via global
coordinators JP Morgan and Barclays, the lead
manager said.
Several companies hit by the COVID-19 crisis, such as Jaguar
LandRover and Rolls Royce, have successfully raised money
via junk bonds in the past few weeks.
But Aston Martin's deal coincides with a volatile time for
markets ahead of the U.S. presidential election next week, with
global equity markets under heavy pressure.
Althea Spinozzi, a fixed income strategist at SaxoBank, said
the company had negative operating margins.
"Plus, with the Brexit hovering on top of its head, I can
see why investors would not touch it unless adequately
rewarded," she said.
The bond deal is to help to redeem existing senior secured
debt, repay a government-guaranteed loan and put cash on the
balance sheet for Aston Martin.
The carmaker floated two years ago but its shares have lost
about two-thirds of their value this year.
The British company said earlier this week that Daimler's
Mercedes-Benz division is to increase its stake in
Aston Martin to up to 20% by 2023, making it one of its largest
shareholders.
(Reporting by Abhinav Ramnarayan
Editing by Rachel Armstrong and Jane Merriman)
