British luxury carmaker Aston Martin (AML.L) has increased the yield on offer for its $1.1 billion junk bond sale to around 10.5%, according to a lead manager on the deal, making it one of the highest-yielding bond issues in Europe this year. FILE PHOTO: Aston Martin Lagonda cars parked outside the carmaker’s new factory in St Athan, Wales, Britain, December 6, 2019.
The loss-making company earlier this week announced the sterling and dollar bond sale as part of a wider financing package and set initial yield expectations at “high” 8%-9%.
The sterling tranche on the Aston Martin deal has been cancelled and the deal is set to price later today via global coordinators JP Morgan (JPM.N) and Barclays (BARC.L) , the lead manager said.
Several companies hit by the COVID-19 crisis, such as Jaguar LandRover and Rolls Royce (RR.L) , have successfully raised money via junk bonds in the past few weeks.
But Aston Martin’s deal coincides with a volatile time for markets ahead of the U.S. presidential election next week, with global equity markets under heavy pressure.
Althea Spinozzi, a fixed income strategist at SaxoBank, said the company had negative operating margins.
“Plus, with the Brexit hovering on top of its head, I can see why investors would not touch it unless adequately rewarded,” she said.