Regal Rexnord sets early guidance in benchmark split-rated four-part notes offering

By Paul A. Harris

Portland, Ore., Jan. 9 – Regal Rexnord Corp. kicked off a benchmark split-rated offering of senior notes (Baa3/BB+/BBB-) in four tranches on Monday, according to market sources.

The deal, which will be priced on the investment-grade desk, includes three-year notes with initial guidance in the Treasuries plus 245 basis points area, five-year notes with initial guidance in the 270 bps area, seven-year notes with initial guidance 300 bps area and 10-year notes with initial guidance 325 bps area.

Based on Monday morning Treasury yields, the three-year notes would yield approximately 6.45%, the five-year notes would yield approximately 6.4%, the seven-year notes would yield approximately 6.65% and the 10-year notes would yield approximately 6.78%, a sellside source said.

Early demand for the notes came to $5.9 billion across all four tranches, with demand skewed significantly toward the 10-year notes, the sellsider added.

High-yield investors were taking an active interest in the deal as the Jan. 9 week got underway, a trader said.

The Rule 144A and Regulation S offering is set to price later in the Jan. 9 week.

J.P. Morgan Securities LLC, BofA Securities Inc. and U.S. Bancorp Investments Inc. are the active bookrunners. PNC Capital Markets LLC, Wells Fargo Securities LLC, Citigroup Global Markets Inc. and Truist Securities Inc. are the passive bookrunners.

Proceeds will be used to help refinance the $5.5 billion 364-day senior bridge loan put in place during early November to fund the $4.95 billion acquisition of Altra Industrial Motion Corp.

The financing also includes a $1 billion backstop revolver and a roughly $1.03 billion backstop term loan.

Regal Rexnord is a Beloit, Wis.-based manufacturer of industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems. Altra Industrial is a Braintree, Mass.-based designer and manufacturer of highly engineered motion control, automation and power transmission solutions.

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