Staples Seeks $1.8 Billion Loan, Floats Double-Digit Yield

(Bloomberg) -- Banks led by Morgan Stanley are kicking off a $1.8 billion leveraged loan sale for Staples Inc. as the office supplier seeks to refinance its debt load.

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A call for the deal will be held 10:30 a.m. ET on Tuesday, according to a person familiar with the matter, who asked not to be identified as they’re not authorized to speak publicly. Proceeds, along with $2.35 billion of other secured debt, will be used to refinance other borrowings, the person added.

Early pricing discussions on the loan call for the debt to carry interest of as much as 525 basis points over the Secured Overnight Financing Rate and be sold at a discounted price of 98 cents to 98.5 cents on the dollar, the person said. That pricing would equate to a yield of at least 10.5%.

Morgan Stanley and Staples declined to comment.

The Sycamore Partners-backed chain on May 10 launched an offer to exchange bonds due in three years with longer-dated notes, as well as an effort to repurchase some debt. Bloomberg reported last month that banks including Morgan Stanley were gauging investor interest in a debt-refinancing package.

Investor demand has been strong for risky debt. Sales of high-yield bonds last week were the highest since 2021 while borrowers launched more than $30 billion of leveraged loans.

Staples has more than $7.5 billion in debt outstanding, including a $286 million term loan due in September, according to data compiled by Bloomberg.

--With assistance from Jeannine Amodeo.

(Adds initial price talk in third paragraph.)

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