HG bonds: Zimmer Biomet prices $1.6B in 2 parts backing refinancing play; terms

Zimmer Biomet Holdings Inc. on Nov. 15 completed a $1.6 billion offering of senior notes in two parts, as it conducts a tender offer for a larger amount of its existing notes.

The musculoskeletal healthcare products provider has launched a concurrent cash tender offer for any and all its $300 million of 3.70% senior notes due 2023, and up to $1.5 billion of outstanding notes across its 3.550% senior notes due 2025, 3.550% senior notes due 2030, 4.450% senior notes due 2045, 3.050% senior notes due 2026, 4.250% senior notes due 2035 and 5.750% senior notes due 2039. Zimmer intends to use the net proceeds from the bond offering, together with cash on hand, to pay for the notes purchased in the tender offer. Any remaining net proceeds would be used to repay its other debt.

The BBB/Baa3/BBB ratings profile reflects stable outlooks on all sides. Fitch on Monday said its ratings on the company reflect Zimmer's "leading global market positions in its largest business lines, new product pipeline introductions and strong market performance," as well as a strong free cash flow profile. Fitch projects a gross debt/EBITDA ratio at or below 3x by the end of this year or early 2022, reflecting $7.55 billion of debt as of Sept. 30 this year.

The new bond offering is the first for the company since March 13, 2020, when pandemic dynamics first settled over the marketplace. That $1.5 billion offering —which addressed a $1.5 billion bond maturity in April 2020 — was priced across 3.05% long five-year notes due Jan. 15, 2026, at T+237.5 and 3.55% 10-year notes due March 20, 2030, at T+262.5.

Terms: