US-headquartered private markets giant Blackstone is looking to raise €600 million to fund its business operations through the issue of 10-year, 1.000 percent senior notes.
Credit rating agency Fitch said it believes Blackstone’s issuance will be used to refinance $585 million of existing bonds which are due to mature in 2019
While issuing bonds to fund private equity activity is unusual but not unknown, the way in which Blackstone is expected to mobilise the capital is relatively uncommon.
“There is $8 billion of public bonds outstanding for the rated peer group [Blackstone, Carlyle, KKR, Apollo, Oaktree, and Ares] plus $775 million of perpetual preferred securities outstanding, so it is not a very large market,” Meghan Neenan, senior director financial institutions at Fitch Ratings, told pfm.
“Bond proceeds have generally been used to fund balance sheet co-investments in managed funds, for acquisitions, and (less-so) for pre-funding maturities,” Neenan said.
In most cases, notes have been relatively long-dated, with 10-year and 30-year issuance, so they don’t need to come to market to refinance maturing debt too frequently.
The agency expects to assign the notes, due 2026, an A+ rating. While gross leverage levels are expected to increase following the issuance, Blackstone is expected to remain in a negative net debt position, the agency said.
The notes are fully guaranteed by The Blackstone Group and its indirect subsidiaries. They will be offered and sold to qualified institutional buyers in the US.