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(Updates story to reflect pricing)
By Abhinav Ramnarayan
LONDON, Oct 30 (Reuters) - British luxury carmaker Aston
Martin has had to increase the yield on offer on a $1.1
billion junk bond sale to 10.5% to get the deal over the line,
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%.
But on Friday, the sterling tranche was cancelled and global
coordinators JP Morgan and Barclays went out
with new price guidance of around 10.5%, a lead manager said.
After the market closed, the five-year bond priced at
exactly 10.5%, 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 coincided 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.
Aston Martin did not immediately respond to a request for
comment.
(Reporting by Abhinav Ramnarayan
Editing by Rachel Armstrong and Jane Merriman)
