LONDON -- U.S. auto parts supplier Hayes Lemmerz International Inc. will price its planned 120 million euro seven-year high-yield bond on Wednesday, a banker familiar with the deal said Tuesday.
The deal will be priced to give a yield of between 10.75 percent and 11 percent, the banker said.
That will be one of the highest coupons seen in Europe in the last eight months for a fixed-rate cash-pay bond.
A selloff in the high-yield market in recent days combined with an issuer from the troubled auto parts sector means the company needs to offer a juicy return to tempt investors.
Citigroup and Merrill Lynch are managing the sale, which comes after the company's lenders agreed to amend the terms of senior secured term and revolving loans to reduce borrowing costs and ease financial covenants.
Credit rating agency Standard & Poor's last week revised its outlook on Hayes to negative from stable, citing concerns about difficult industry conditions in North America, including reduced vehicle production and continuing high raw material prices.
S&P also assigned a B+ rating to the planned new notes, saying that although the issue will increase debt levels it would also improve liquidity.
Moody's Investors Service has assigned a B2 rating to the proposed new notes, one notch below S&P's rating.
Half the proceeds from the note sale will be used to pay existing senior secured term loans, with the other half to be used to boost the company's cash reserves or repay other outstanding debt, Moody's said in a statement.