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

Jefferies Group Inc., the investment bank that agreed in November to be acquired by Leucadia National Corp., 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.