Commentary & Deal Flow

Rolls-Royce plc (ROLLS)  GBP2bn equivalent (EUR/GBP/USD) (up from GBP1.5bn, and from a minimum GBP1bn expected size) 144A/Reg S sr note notes 3-part. Ba3/BB-/BB+ (negative/negative/negative). Via BNPP (EUR B&D)/Citi (USD B&D)/GS (GBP B&D) glocos/joint books. No reg rights. NY law. List: FCA official list and LSE. Clearing/settlement: Euroclear/Clearstream.

    - EUR750m due Feb 2026 (5.33y). NCL (MWC) (3mo par call). IPT 5.00%-5.25%. Px talk: 4.875% area.

    - GBP550m due Oct 2027 (7y). NCL (MWC) (3mo par call). IPT 6.25% area. Px  talk: 6.00% area.

   - USD1bn due Oct 2027 (7y). NCL (MWC) (3mo par call). IPT 6.25% area. Px talk: 6.00% area.

Did a Europe/US roadshow 10/06-09 (6h Oct: (group investor call and 1x1s and small groups); Wed 7th Oct: (1x1s and small groups); Thu 8th Oct: (1x1s and small groups); Fri 9th Oct: (1x1s and small groups). Books close: US at COB NYT today; Europe at 11am UKT tomorrow. Pricing tomorrow. Original GBP1bn UOP: along with the announced rights issue, will be used for enhancing liquidity headroom, for GCP, and to repay upcoming debt maturities as they fall due, including the $500m 2.375% notes due October 2020, (ii) the EUR750m 2.125% notes due June 2021 and (iii) the GBP300m Commercial Paper due March 2021. Proceeds in excess of GBP1bn will be used for GCP, and may also be use to reduce any potential future increase in the UKEF loan. It is part of the recapitalization package announced on 10/01.  Biz: manufacturer of jet engines and other integrated high-speed reciprocating engine power systems or use in the air, on land and at sea. HQ: London, UK.

Also raising an approx GBP2bn 10 for 3 rights issue for its ordinary shares (6,436,651,043 shares at 32 pence), a GBP1bn new 2y term loan, support in principle from UK Export Finance for an extension of its existing 80% guarantee to back a potential loan increase of up to GBP1bn to its existing GBP 5y term loan. The rights issue is subject to shareholder approval at the general meeting to be held Oct 27, with settlement Nov 11. Underwriters for the rights issue are BNPP, Citi, GS, HSBC, Jefferies and MS as Joint Global Coordinators and CA, Santander, SMBC Nikko and SocGen as Co-lead Managers.