Eldorado Resorts Launches $6 Billion Junk Bond for Caesars
Eldorado Resorts Launches $6 Billion Junk Bond for Caesars
(Bloomberg) -- Eldorado Resorts Inc. launched the sale of about $6 billion of high-yield bonds on Wednesday to finance its acquisition of Caesars Entertainment Corp.
The company is marketing a $3.08 billion five-year secured bond with early pricing discussions in the low-to-mid 6% range, and a $1.875 billion seven-year unsecured bond in the mid-to-high 8% range, according to people familiar with the matter. JPMorgan Chase & Co is leading the sale.
Books had already reached about $6 billion as of Wednesday afternoon in New York on the two tranches, about half of which was spoken for before the launch, other people familiar said, who asked not to be named discussing a private transaction.
The bonds launched on Wednesday and the deal is expected to price Friday.
Under Caesars Resort, the company is also marketing $1.05 billion of five-year secured bonds. Credit Suisse Group AG is leading this portion.
The financing was one of the largest commitments signed by banks before the Covid-19 pandemic. The banks on this deal recently negotiated better terms that gave them the flexibility to shift a substantial portion of the debt to secured bonds from leveraged loans.
The company also launched a $1.47 billion Term Loan B to fund the acquisition. The commitment deadline was moved up to Friday June 19 from Wednesday June 24 originally. Pricing is being discussed at 450 basis points over the London interbank offered rate with a discount of 96 cents on the dollar.
Moody’s Investors Service downgraded Eldorado Resorts on Wednesday by one notch to B2, five steps below investment grade, citing the increase in debt, risks associated with integrating and executing the acquisition. They also cited the disruption to casinos caused by the coronavirus. Moody’s rated the new secured notes B1 and the unsecured notes Caa1.
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