Yum Brands owner of Pizza Hut, KFC and Taco Bell restaurant chains, sold $600 million in bonds

Yum Brands owner of Pizza Hut, KFC and Taco Bell restaurant chains, sold $600 million in bonds

Yum Brands Inc owner of Pizza Hut, KFC and Taco Bell restaurant chains, sold $600 million in bonds on Monday, reopening the U.S. market for junk-rated debt issues after its longest lull since the 2008 financial crisis.

Yum's bond offering represented a glimmer of investor demand in one of the riskiest corners of the corporate credit market, which seized up for much of March after the coronavirus outbreak morphed into an economically devastating pandemic.

While U.S. companies last week issued new investment-grade debt at a record clip, there had been no new issuance in the so-called high-yield market for junk-rated debt issuers since March 4.

Yum boosted its debt offering by 20%, after planning to raise $500 million. The deal was more than 10 times oversubscribed, according to a person familiar with the matter.

However, Yum was forced to accept a considerably higher borrowing cost than in its prior debt deals.

The company sold bonds maturing in 2025 at a 7.75% yield. By comparison, Yum raised $800 million in September through 10-year debt with a yield of 4.75%. The higher the yield, the more expensive the bond is for the company.

The debt proceeds will go toward "general corporate purposes," Yum said in a statement.

The Federal Reserve said last week it will backstop the investment-grade market but has made no such pledge for high-yield debt.



Yum, which has over 48,000 Pizza Hut, Taco Bell and KFC restaurants across the globe, said last week it expects the coronavirus pandemic to impact its second-quarter same-store sales more significantly than in the first quarter, as the fast-spreading virus hits customer traffic at its stores globally.