Heinz Borrows at Record Low in $3.1 Billion Junk-Bond Offering

H.J. Heinz Co., the ketchup maker being acquired by Warren Buffett’s Berkshire Hathaway Inc. and 3G Capital Inc., sold $3.1 billion of dollar-denominated bonds at the lowest coupon on record for comparable debt issued by a speculative-grade borrower.

The company’s 4.25 percent, 7.5-year second-lien, senior secured notes yield 297 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. The coupon is the lowest in data going back to 2004 for similar-maturity, secured debt sold by a junk-rated company, the data show.

The bonds are rated B1 by Moody’s Investors Service, the ratings company said in a statement today.

The sale was increased by about 48 percent after the company marketed $2.1 billion of debt last week, according to a person familiar with the transaction, who asked not to be identified citing lack of authorization to speak publicly.

Heinz canceled plans to distribute $2 billion of the $12 billion in loans backing the purchase in euros and pounds, according to a person with knowledge of that transaction. Heinz may fund the portion with bonds or loans denominated in dollars, said the person, who asked not to be identified because the information is private.

The company reduced the rate on as much as $8.5 billion of the loans backing the purchase, the person said. A six-year B1 loan will pay interest at 2.25 percentage points more than the London interbank offered rate, down from 2.75 percentage points to 3 percentage points originally proposed, and a seven-year B2 slice will pay interest at 250 basis points more than the benchmark.

Wells Fargo & Co., JPMorgan Chase & Co., Barclays Plc and Citigroup Inc. managed the sale of the notes, which were issued through Hawk Acquisition Sub Inc., Bloomberg data show.

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