CDK Global makes fallen-angel debut with $500M of 10-year notes

CDK Global is pitching $500 million of 10-year (non-call five) notes via Bank of America Merrill Lynch, J.P. Morgan, Morgan Stanley, MUFG, USB, and Wells Fargo, sources said. Roadshows are scheduled to run Monday, May 8, through Wednesday, May 10, with pricing thereafter.

The offering is being guided with expected BB+/Ba1 ratings. Issuance will come under Rule 144A.

Proceeds will be used for general corporate purposes, which may include share repurchases, dividends, acquisitions, repayments of debt, and working capital and capital expenditures.

Last November, CDK Global became a fallen angel at the hands of both S&P Global Ratings and Moody’s.

Citing the “expectation for a more aggressive financial policy than previously stated,” S&P Global lowered its corporate and unsecured ratings for the borrower to BB+, from BBB–, while Moody’s bumped the company’s ratings to Ba1, from Baa3.

CDK Global (Nasdaq: CDK) provides integrated information-technology and digital-marketing solutions to the automotive retail and other industries worldwide. The company has an $8.98 billion market cap, and $1.59 billion of total debt, according to S&P Global Market Intelligence. The company’s debt load includes 3.3% notes due 2019 and 4.5% notes due 2024. — Jakema Lewis

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