A $2.2 billion junk bond deal financing the acquisition of luxury retailer Neiman Marcus Group by the owner of Saks Fifth Avenue Inc. saw strong demand as investors flock to high-yielding deals in the credit market.
The company boosted the size of the five-year bond offering by about $200 million and it got twice as many orders than there were bonds for sale, according to people with knowledge of the sale who asked not to be identified discussing private details. The yield on the sale was 11 percent.
Hudson’s Bay Co. agreed earlier this year to buy Neiman for $2.65 billion, with help from Amazon.com Inc. and Salesforce Inc., which would take minority stakes. The deal stands to unite America’s two largest high-end department-store chains: Neiman and Saks, which Hudson’s Bay has owned since 2013.
Investor demand for the bond sale had already exceeded the size of the offering before it launched, Bloomberg reported.
Junk bonds are rallying on the back of a strong US economy and the presidential election. Borrowing costs have dropped as the Federal Reserve has started cutting rates and spreads are near the tightest since the Global Financial Crisis as investors flock to riskier credits with higher yields.
Jefferies Financial Group Inc., Bank of America Corp., Royal Bank of Canada, Citigroup Inc., Morgan Stanley, Wells Fargo & Co., JPMorgan Chase & Co. and Capital One Financial Corp. are serving as bookrunners on the deal.
Jefferies declined to comment. Saks, Neiman Marcus and Hudson’s Bay didn’t respond to requests for comment.
By Gowri Gurumurthy and Jill R. Shah
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Saks Owner Hudson’s Bay Is Selling Junk Bonds for Neiman Deal
Hudson’s Bay Co., the owner of luxury retailer Saks Fifth Avenue Inc., is tapping the junk-bond market to help finance its acquisition of Neiman Marcus Group.
