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Nascar Wins Over Investors on Loan Deal 

Nascar Wins Over Investors on Loan Deal 

(Bloomberg) -- Nascar, the U.S. racing series famed for its stock-car races in Florida and Tennessee, is poised to lock in one of the cheapest borrowing costs of the year on a loan deal.

The company cut pricing on a $1.4 billion loan, the first it’s sold to institutional investors, to just 275 basis points over the Libor benchmark in a receptive market that saw several other borrowers get more favorable terms this week. Just 19 other companies have sold the same kind of new loans in the U.S. at that level or lower this year, according to data compiled by Bloomberg.

Investors liked the debt, which will finance Nascar’s acquisition of International Speedway Corp., for its higher ratings, as well as the well-known, iconic brand. It’s also a rare chance to gain exposure to an auto racing company: Formula One is another to have sold loans.

Nascar also benefits from two TV broadcast agreements with contractual increases through 2024, while high levels of capital spending on track renovations should support results, rating agency Moody’s Investors Service said in July. It gave the loan a Ba2 credit rating, the second highest on the junk scale and rare in a market that has been dominated by lower single B rated loans this year.

Retiring Stars

Still, investors in Nascar’s debt shouldn’t expect a smooth road ahead. The TV broadcasting contracts expire before the loan’s maturity date of 2026, and will need to be negotiated.

While sporting events are typically highly coveted, Nascar has experienced sagging attendance and television ratings after fans fell away as a generation of its most well known stars including Jeff Gordon and Tony Stewart retired. Television home viewing slipped, with Nascar’s 33 races last season averaging a record-low of 3.34 million viewers, from the 4.47 million average two years ago.

Formula One, the iconic global motor-sports business, is probably the closest by comparison. It has also faced attrition to its numbers, but at a slower pace, and made improvements to TV and digital viewership, it said last year. Its total revenue of $1.6 billion just tops Nascar’s $1.4 billion for 2018.

The two businesses also have stark differences.

Monaco, Mercedes

F1 calls to mind more prestigious cars such as Mercedes and Ferrari zipping through Monte Carlo’s gilded streets to a global audience. Nascar is a somewhat different beast for investors to digest. It’s stock car racing, which has its roots in bootlegging during prohibition, and it pits Chevrolet and Ford vehicles against each other at speeds of 200 miles per hour, watched by a U.S. following largely concentrated in the South.

F1 is also more established in the loan market. It’s been a borrower for over a decade, and used loans to help fund its purchase by Liberty Media Corp. completed in 2017. That may help explain why Nascar first marketed the deal at a higher all-in yield than F1, which has a higher level of debt in relation to its earnings, to get investors on board - even though F1’s loan is lower rated. F1’s $2.9 billion facility is ranked B2 by Moody’s.

Right now Nascar is focused on taking the steps needed to complete the merger, said Chris Tropeano, a spokesman for the Daytona Beach, Florida-based company. “We are pleased about the progress that we are making as we work toward a merged operation focused on strategically growing the sport.”

Representatives for Goldman Sachs Group Inc. which is leading the Nascar loan deal, did not return requests for comment.

--With assistance from Lara Wieczezynski.

To contact the reporter on this story: Lisa Lee in New York at llee299@bloomberg.net

To contact the editors responsible for this story: Natalie Harrison at nharrison73@bloomberg.net, Sally Bakewell, Adam Cataldo

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