{"id":47299,"date":"2023-08-11T14:24:40","date_gmt":"2023-08-11T18:24:40","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/tapestrys-bond-spreads-widen-on-news-of-mostly-debt-funded-deal-to-buy-michael-kors-parent\/"},"modified":"2023-08-11T14:24:43","modified_gmt":"2023-08-11T18:24:43","slug":"tapestrys-bond-spreads-widen-on-news-of-mostly-debt-funded-deal-to-buy-michael-kors-parent","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=47299","title":{"rendered":"Tapestry\u2019s bond spreads widen on news of mostly debt-funded deal to buy Michael Kors parent"},"content":{"rendered":"
\n

Moody\u2019s Investors Service placed Tapestry Inc.\u2019s Baa2 rating on review for a possible downgrade on Thursday, after the company said it\u2019s buying Capri, the parent of Michael Kors, for about $8.5 billion in a deal that will be mostly funded with debt. <\/p>\n

The move \u201creflects governance considerations, including the significant increase in debt with the Capri
\n CPRI,
\n -1.31%<\/bg-quote>
\n acquisition and Tapestry\u2019s new leverage target, which will drive a sustained increase relative to the company\u2019s typical under 1x net debt\/EBITDA,\u201d Moody\u2019s said in a statement. <\/p>\n

\n

The deal will be funded with bonds, term loans and balance sheet cash. <\/p>\n

The company said it has secured $8 billion in committed bridge financing from Bank of America and Morgan Stanley. That makes it the biggest high-grade M&A financing of the year to date, according to Bloomberg, ahead of the $5.75 billion bridge loan that Nasdaq Inc.
\n NDAQ,
\n -0.72%<\/bg-quote>
\n secured to fund its acquisition of software company Adenza from private-equity firm Thoma Bravo in June. <\/p>\n

For more, see: <\/strong>Nasdaq stock suffering biggest selloff in 10 years as the deal to buy Adenza includes more than $4 billion in stock<\/p>\n

Tapestry
\n TPR,
\n +2.15%<\/bg-quote>
\n said it\u2019s determined to retain its investment-grade rating by suspending share buybacks. <\/p>\n

For more, read:<\/strong> Coach parent Tapestry to acquire Michael Kors parent Capri in cash deal valued at $8.5 billion<\/p>\n

\u201cTapestry\u2019s acquisition of Capri will increase its scale and customer reach by adding three valuable brands to its global luxury portfolio, while applying Tapestry\u2019s direct-to-consumer focus and technology platform to grow profitability at Michael Kors, Versace and Jimmy Choo,\u201d Moody\u2019s Vice President-Senior analyst Raya Sokolyanska said. <\/p>\n

\u201cAt the same time, the company\u2019s new financial policy will result in materially higher leverage than in the past, and the acquisition itself will temporarily raise leverage well above the company\u2019s under 2.5x target.\u201d <\/p>\n

As the following chart from data-as-a-service company\u00a0BondCliQ Media Services\u00a0shows, Tapestry has three outstanding bond series totaling $1.2 billion of debt. The bonds are due to mature in 2025, 2027 and 2032.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n
<\/div>\n<\/figure><\/div>\n

The next chart shows the performance of the most active bonds, the 3.05% notes that mature in March of 2032, over the last three days with spreads roughly 25 basis points wider. The news was broken late Wednesday by the Wall Street Journal.\u00a0<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

The next chart shows the last 10 days when there was net selling of the bonds.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

The stock was last down 16%. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Moody\u2019s Investors Service placed Tapestry Inc.\u2019s Baa2 rating on review for a possible downgrade on Thursday, after the company said it\u2019s buying Capri, the parent of Michael Kors, for about $8.5 billion in a deal that will be mostly funded with debt. The move \u201creflects governance considerations, including the significant increase in debt with the […]<\/p>\n","protected":false},"author":1,"featured_media":47300,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-47299","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nTapestry\u2019s bond spreads widen on news of mostly debt-funded deal to buy Michael Kors parent | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Moody\u2019s Investors Service placed Tapestry Inc.\u2019s Baa2 rating on review for a possible downgrade on Thursday, after the company said it\u2019s buying Capri, the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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