Hub International pitches 2-part bond deal to fund distribution, M&A

Hub International Ltd. has proposed a two-part bond offering that includes a $650 million tranche of seven-year (non-call three) secured notes and a $550 million tranche of eight-year (non-call three) senior unsecured notes. Pricing is expected in tomorrow’s business, according to market sources.

Joint bookrunners are BofA Securities, Morgan Stanley, J.P. Morgan, Barclays, Goldman Sachs, Credit Suisse, Macquarie, BMO Capital Markets and Nomura.

Hub International, backed by Hellman & Friedman, provides insurance brokerage services, including property and casualty, life and health, employee benefits, and investment and risk management services. Proceeds of the bonds, alongside those of a new $1.1 billion term loan add-on, will be used to fund a distribution to shareholders and finance expected acquisitions in the fourth quarter.

The add-on loan is offered at 99.28 and will be fungible with the existing covenant-lite TLB due April 2025 that is priced at L+325, with a 0.75% Libor floor. The existing loan currently totals about $1.495 billion.

Moody’s on Nov. 15 affirmed the B3 corporate family rating for Hub International, as well as the B2 rating on its secured debt and the Caa2 grade for its unsecured debt. The ratings outlook is stable.

S&P Global Ratings earlier this week said its existing B rating and stable outlook on the company, its secured debt B rating and its senior unsecured debt CCC+ rating are unaffected. The agency has forecasted revenue to exceed $3.1 billion in 2021 and $3.5 billion for 2022.

Hub International has an existing issue of 7% senior unsecured notes due 2026, which closed yesterday’s session at 103.125% of par, yielding 3.85%, trade data show.