(Reuters) – Yum Brands Inc (YUM.N), 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 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. 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 towards “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.

Yum was among several restaurant companies that this month the White House for aid to help weather the coronavirus crisis.

Earlier on Monday, Moody’s amended Yum’s ratings outlook to “negative” from “stable.”

“The negative outlook reflects the risk that there may be a sustained weakening in Yum’s credit metrics as they are increasing debt levels at a time when the company is facing significant uncertainty surrounding the potential length and severity of restaurant closures and the ultimate impact that these closures will have on Yum’s revenues, earnings and liquidity,” Moody’s Senior Credit Officer Bill Fahy said in a statement.

Yum shares, which are down 29.8% in 2020, closed up 3.1% at $70.67, giving it a market value of $21 billion.

Reporting by Joshua Franklin in New York; Editing by Cynthia Osterman

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Global health forum set for June in Qingdao

The second Global Health Forum of the Boao Forum for Asia is set to be held in Qingdao, Shandong province, in mid-June. It will be the first comprehensive international conference pertaining to health issues after the novel coronavirus outbreak, “which…

Agents announce seizure of suspected counterfeit Apple AirPods that are actually OnePlus Buds

(CNN)Like most Apple products, the company’s wireless earbuds, the Apple AirPods, have prompted a number of copycat designs. US Customs and Border Protection announced that on August 31 it had seized what it said was a shipment of counterfeit Apple…

Oracle adds cloud data centers in five countries, sets new 2020 target

SAN FRANCISCO (Reuters) – Oracle Corp (ORCL.N) said on Monday it had added new cloud computing data centers in five countries and aims to have them in 36 locations by the end of 2020, as it races with Amazon.com (AMZN.O)…

Snap stock soars over 20% on strong user growth

(CNN Business)More time at home has meant more people on Snapchat. On Tuesday, the social platform announced it had 249 million daily active users at the end of the third quarter, an increase of 18% compared to the same time…