Jefferies Raises $1 Billion in First Dollar Bond Sale Since 2011

Jefferies Group Inc. (JEF), the investment bank that agreed in November to be acquired by Leucadia National Corp. (LUK), raised $1 billion after increasing the size of its first dollar bond sale in about 21 months.

The bank sold $600 million of 5.125 percent, 10-year securities to yield 332.5 basis points more than similar- maturity Treasuries and $400 million of 6.5 percent, 30-year bonds at a relative yield of 357.5 basis points, according to data compiled by Bloomberg. The offering was originally set at $750 million, according to a person familiar with the transaction, who asked not to be identified citing lack of authorization to speak publicly.

Jefferies previously sold dollar debt in April 2011, issuing $800 million of 5.125 percent, seven-year debentures to yield 220 basis points more than benchmarks, Bloomberg data show. The bonds traded at 105.8 cents on the dollar to yield 3.9 percent, or a spread of 312 basis points, on Jan. 8, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Proceeds will be used to pre-fund the bank’s $250 million of 5.875 percent notes due June 2014, said the person. About $350 million of proceeds will be used by Jefferies High Yield Holdings LLC for a required redemption of two series of its outstanding non-controlling membership interests.

The new bonds are expected to be rated Baa3, the lowest level of investment grade, by Moody’s Investors Service, Bloomberg data show.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net

To contact the editor responsible for this story Alan Goldstein at agoldstein5@bloomberg.net

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