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First Data Issued the Most Junk Bonds in the Week to October 30

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Pricing trends

The junk bond issuance activity rose in the week ending October 30 due to improved secondary market sentiment and the Fed keeping the interest rate unchanged during the October 27–28 FOMC (Federal Open Market Committee) meeting. Last week, the number of issues remained unchanged at five.

Mutual funds like the PIMCO High Yield Fund – Class A (PHDAX) and the Fidelity High Income Fund (SPHIX) invest in junk bonds.

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Deal highlight of the week

First Data (FDC) makes payment transactions secure, fast, and easy for financial institutions, merchants, and their customers. It issued junk bonds worth $3.4 billion last week. The senior notes were rated Caa1/B and carried a coupon of 7.0%. The bonds will mature on December 1, 2023.

First Data intends to use the proceeds from the offering of the notes to redeem or repurchase a $650 million aggregate principal amount of its 12.6% senior unsecured notes due in 2021. It will also pay related fees and expenses.

L Brands (LB) had been called “Limited Brands.” It’s the parent company of brands like Victoria’s Secret, PINK, Bath & Body Works, Henri Bendel, and La Senza. It issued junk bonds worth $1.0 billion last week. The senior notes were rated Ba1/BB+ and carried a coupon of 6.9%. The bonds will mature on November 1, 2035.

The company intends to use the net proceeds for general corporate purposes including capital expenditures, dividends, and share repurchases.

Level 3 Financing is a wholly owned subsidiary of Level 3 Communications (LVLT). It issued junk bonds worth $900 million last week. The senior notes were rated B1/B and carried a coupon of 5.4%. The bonds will mature on January 15, 2024.

The net proceeds from the offering of the notes will be used to refinance older debt.

Lennar (LEN) is a leading homebuilder in the US. It issued junk bonds worth $400 million last week. The senior notes were rated Ba2/BB and carried a coupon of 4.9%. The bonds will mature on December 15, 2023. The company will use the proceeds for working capital and general corporate purposes.

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