Jaguar Land Rover is exploring new high-yield bond sale

  • JLR has $1.38 billion of maturing bonds over the next 2-year, including two $500 million bonds due in November 2019 and March 2020
  • Last week Moody’s Investors Service cut its rating on the company to B1 from Ba3, citing elevated leverage and negative free cash flow

London: Jaguar Land Rover Automotive Plc has this month approached European investors via a bank for a potential new bond financing, according to people familiar with the matter.

Assessing appetite for a high-yield offering marks a shift from earlier in the year when Britain’s biggest automaker said that market conditions weren’t right for it to borrow from the bond market. Since then JLR has delivered its first profit in four quarters and the yield on its 4.5% euro notes due 2026 has narrowed to 6.8% from a record high of 9.4% in February, Bloomberg data show.

“We’ve always regularly monitored the capital market and issued bonds when market conditions were considered appropriate, and therefore continue to monitor the market on an ongoing basis," a JLR spokeswoman said in emailed comments on Wednesday.

The maker of the Land Rover Discovery SUV has £1.08 billion-equivalent ($1.38 billion) of maturing bonds over the next two years, including two $500 million bonds due in November 2019 and March 2020. Last week Moody’s Investors Service cut its rating on the company to B1 from Ba3, citing elevated leverage and negative free cash flow.

As of March, JLR had £3.8 billion of cash on the balance sheet and access to a fully undrawn £1.9 billion revolving credit facility due July 2022 with no financial covenants, according to Moody’s.

Funding options this financial year include the utilization of a new $700 million receivable financing facility and potential new financing such as export credit agency funding, certain finance leases and new bond issues, JLR’s spokeswoman said.

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