By Serena Ruffoni
Annington Homes, through the vehicle Annington Finance n5, is
expecting to price its subordinated, "payment in kind," 10-year
bond later Thursday, said Barclays PLC, the bank solely managing
the deal.
The size of the transaction has been raised to 550 million
pounds ($876 million) from GBP500 million, with an expected yield
of 13%.
As a "payment in kind," or PIK, bond, the coupons won't be paid
in fixed installments, but will be paid in full at the bond's
maturity date. It sits subordinated to other debt in the capital
structure.
The 10-year transaction, according to Barclays, will be the
largest global PIK bond this year.
The Annington Homes bond will be used to part-finance the GBP3.2
billion acquisition of real estate company Annington Group by
private equity company Terra Firma, which was announced Monday.
This is the second such transaction in a week, after a 10-month
long hiatus in issuance. A week ago, Swedish cable company Com Hem
issued a EUR250 million seven-year PIK note paying a 13% yield. PIK
notes, quite popular before the 2008 financial crisis, have faded
as companies and investors have shied away from aggressive
financing practices.
Due to its elevated risk level, the bond's expected ratings are
Caa1 from Moody's Investors Service Inc. and CCC+ by Standard &
Poor's.
Write to Serena Ruffoni at serena.ruffoni@dowjones.com