BellRing Brands Sells $840 Million of Junk Bonds in Deal Revival

(Bloomberg) -- BellRing Brands Inc. sold $840 million of junk bonds in a second attempt in about a week to raise debt after market volatility forced the protein shake maker to postpone its initial bond offering.

JPMorgan & Chase Co. led the sale of the notes due 2030, which priced with a 7% yield, according to a person familiar with the matter, who asked not to be identified because they're not authorized to speak about it. Proceeds from the senior unsecured bond transaction will help fund its spinoff from Post Holdings Inc., the company said in Tuesday statement.

BellRing first began marketing an $840 million junk-bond sale Feb. 22, but was forced to shelve the offering amid market volatility. It said in a Thursday statement announcing the withdrawal that it expected to relaunch the transaction in the coming weeks.

Early pricing discussions on the postponed 10-year offering were for a yield of about 7%. Before being withdrawn, the proposed yield had been increased to about 7.75%, Bloomberg previously reported, citing people with knowledge of the matter.

Market Volatility

BellRing revived the deal amid a nearly three-week junk-market hiatus that was only interrupted by a $1 billion sale by Twitter Inc. last week.

The Russian invasion of Ukraine has only been the final straw for a market that has long been dealing with uncertainties around rising inflation and how aggressively the Federal Reserve will decide to raise interest rates.

The broader junk-bond index posted losses for the second consecutive month in February, while the primary market slowed with just 16 deals for a little more than $9 billion pricing, the slowest February since 2016.

Still, some expect some deals to price despite the volatility. Companies looking to raise money for new financing, including leveraged buyouts, spin-outs and mergers might “test the waters” and come to market, according to John Zito, deputy chief investment officer at Apollo Global Management Inc.

Read more: Apollo Sees New Financing Opportunities in Volatile Debt Market

In an interview with Bloomberg Television Monday, Kevin Foley, global head of debt capital markets at JPMorgan, said that although the market is driven by headlines, “deals are getting done.”

“You have to be checking the weather each day,” said Foley. “But again, cash is out there, it is getting deployed, it's getting to work.”