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JPMorgan-Led Group Discussing 11% Yield on Struggling Junk-Bond Sale

  • Oldcastle selling $585 million unsecured junk bond for buyout
  • Financing package includes secured bond and leveraged loan

A group of banks led by JPMorgan Chase & Co. is struggling to sell a $585 million junk bond to help fund the acquisition of building materials business Oldcastle BuildingEnvelope Inc. by buyout firm KPS Capital Partners, according to people with knowledge of the matter.

Pricing discussions on the unsecured notes have increased to a yield of up to 11%, said the people, who asked not to be identified because the transaction is private. That’s more than initial pricing discussions of mid-to-high 9% on the deal, and above the average yield of 9.81% on debt in the CCC tier.