2 Mar, 2022

Macy's completes 2-part bond offering for refinancing effort; terms

Macy's Inc. has completed an evenly split $850 million, two-part offering of senior unsecured notes. Both the 5.875% eight-year bonds and 10-year 6.125% tranche priced tight of guidance. Credit Suisse was lead bookrunner.

Proceeds, together with cash on hand, will be used to redeem the company's 6.65% second-lien notes due 2024, 2.875% senior notes due 2023, 4.375% senior notes due 2023, 3.625% senior notes due 2024, and 6.65% senior notes due 2024 and for general corporate purposes, including to pay call premiums.

Macy's is an omnichannel retailer. Its wholly owned subsidiary Macy's Retail Holdings LLC is the issuer for the bonds.

S&P Global Ratings on Feb. 28 upgraded the company to BB from BB-, with a positive outlook, citing a stronger-than-expected sales performance and margin expansion for 2021. Moody's on Feb. 23 upgraded the company by one notch to Ba1, citing a clear and conservative financial strategy. Unsecured ratings were upgraded to Ba2 from Ba3. Similarly, Fitch on Feb. 22 boosted the company's rating, as well as the second-lien and unsecured debt grades, to BBB- from BB+, citing strong sales and "some evidence of successful implementation of omnichannel and other topline initiatives."

Terms:

Issuer Macy's Retail Holdings LLC
Ratings BB/Ba2/BBB-
Amount $425 million
Issue Senior unsecured notes (144A/Reg S for life)
Coupon 5.875%
Price 100
Yield 5.875%
Spread T+407
Maturity March 15, 2030
Call Non-call three (first call at 102.938% on March 15, 2025; then 101.469% on March 15, 2026; then par on March 15, 2027, and thereafter).
Price talk 6%-6.25%
Notes Up-to-40% equity claw at 105.875% prior to March 15, 2025; change-of-control put at 101%; make-whole at T+50 prior to March 15, 2025.

Issuer Macy's Retail Holdings LLC
Ratings BB/Ba2/BBB-
Amount $425 million
Issue Senior unsecured notes (144A/Reg S for life)
Coupon 6.125%
Price 100
Yield 6.125%
Spread T+428
Maturity March 15, 2032
Call Non-call five (first call at 103.063% on March 15, 2027; then 102.042% on March 15, 2028; then 101.021% on March 15, 2029; then par on March 15, 2030, and thereafter).
Price talk 6.25%-6.50%
Notes Up-to-40% equity claw at 106.125% prior to March 15, 2025; change-of-control put at 101%; make-whole at T+50 prior to March 15, 2027.
Bookrunners CS (left lead)/BofA/USB/WF/FT/PNC/GS
Co-managers CapOne/C/MUFG/JPM/Barc/CIT/Loop/Ramirez/SiebertWilliams
Trade (date) March 2, 2022
Settle March 10, 2022 (T+6)