Bond, PIK bond

25 September 2019 By Anna Szymanski Follow @Three_Guineas

The eye-popping 12% interest rate on the luxury automaker’s new $150 mln bond highlights creditor concerns about demand, cash burn and Brexit. But if targets for a new SUV are not met quickly and the company again runs short of cash, investors may find the yield is not enough.

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Luxury carmaker Aston Martin Lagonda will see its borrowing costs jump after it raised $150 million in debt at a 12% interest rate. The funds will bolster its balance sheet for its DBX sports utility vehicle launch next year, with the option for another $100 million.

Ratings agency Standard & Poor’s downgraded its issuer credit and issue ratings to CCC-plus from B-minus, with a negative outlook, saying it believed Aston Martin had reached the ceiling in terms of the amount of term debt and cash interest burden it could sustainably service.

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