The new high-yield deal will be split between $500 million of first-lien notes and $1.35 billion of second-lien notes. Fitch said it expects to rate the notes at B+ and CCC respectively.
The Las-Vegas-based casino operator and owner of Caesars Palace, said in an 8K filing with the Securities and Exchange Commission that it has also launched the syndication of $3.27 billion of new senior secured credit facilities, consisting of a $3 billion term loan and a $269.5 million revolver.
Proceeds will be used to repurchase approximately $4.4 billion in outstanding debt at the PropCo and refinance the $450 million term loan used to fund its Caesars Linq and Caesars Octavius units.
Caesars will pay 99 percent of par for $3.67 billion in outstanding PropCo mortgage notes and 90 percent of par for $719 million in outstanding mezzanine notes.
Saddled with more than $20 billion of debt after its LBO five years ago, Caesars announced in April that it would spin off assets, with buyout firms Apollo Global Management LLC and TPG Capital LP investing $250 million each in a new venture called Caesars Growth Partners.
Apollo and TPG collectively own 70 percent of Caesars.
“When you see a new deal from Caesars you know we’re in a bullish new issue market,” said one trader.
No official mandate with details of the banks leading the deal has yet been announced, but Citigroup is expected to be involved in both the loan and the bond, according to market sources.
One other deal joined the pipeline on Wednesday, a $315m eight-year non-call three senior notes transaction for CPG International that will fund its proposed $1.5 billion leveraged buyout from the current owner AEA Investors, and refinance existing debt.
The roadshow for that deal begins today via JP Morgan, Barclays, Deutsche Bank, Citi, RBS and UBS, and pricing is expected next Tuesday.
Rachelle Kakouris is a reporter for IFR in New York