Focus Brands Inc., owner of Cinnabon and Carvel, is seeking $201 million of loans for its purchase of McAlister’s Deli, while Hudson’s Bay Co. set the rate on a $2.3 billion of loans backing its acquisition of Saks Inc.
Roark Capital Group-controlled Focus Brands, based in Atlanta, is offering to pay 3.25 percentage points more than the London interbank offered rate, with a 1 percent minimum on the lending benchmark, according to a person with knowledge of the offering.
Hudson’s Bay, Canada’s largest department-store operator, will pay 3.75 percentage points more than Libor for a seven-year, $2 billion term loan and 7.25 percent more than the benchmark for a $300 million junior loan, according to another person with knowledge of that offering. Both borrowings will have a 1 percent minimum on Libor, said the person, who asked not to be identified without authorization to speak publicly.
The price on the largest first-lien loans averaged 97.51 cents on the dollar today, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index. Floating-rate debt has returned 3.7 percent this year, outpacing the 3.6 percent gains on the Bloomberg USD High Yield Corporate Bond Index.
JPMorgan Chase & Co., the second-largest underwriter of leveraged loans, lifted its sales forecast for the floating-rate debt by $125 billion to $625 billion this year, according to an Oct. 4 report. Leveraged loans are rated below Baa3 by Moody’s Investors Service and lower than BBB- at S&P.