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Marcus Ashworth

The Rolls-Royce of Junk Bonds Has Arrived

The British maker of jet engines is having to pay up to get away a bumper debt sale. Maybe it should have dumped its credit ratings.

Polishing up the coupon.

Polishing up the coupon.

Photographer: Adam Berry/Getty Images
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Rolls-Royce Holdings Plc, the famous old British jet-engine manufacturer, is paying the price for its recent troubles. A two billion-pound ($2.6 billion) bond sale on Wednesday — in dollars, euros and sterling — comes with much higher coupons than its previous debt issues. It will regret losing its investment-grade status earlier this year.

The company still has debt-market appeal, however. This is the third-biggest junk bond sale this year, and demand has been high. Back in June, we had Fiat Chrysler Automobiles NV’s 3.5 billion-euro ($4.1 billion) issue and a 2.25 billion-euro bond to finance the private equity buyout of ThyssenKrupp Elevators.