NEW YORK - Citigroup Inc. added another quarter point to the yield on a seven-year term loan for U.K. equipment-rental company Ashtead Group PLC to entice investors, sources familiar with the loan said.
The yield on the $275 million loan, which forms part of an $825 million credit facility financing Ashtead's purchase of U.S. rental business, Rentokil PLC, was boosted to 300 basis points more than the London interbank offered rate, from 250 basis points more than Libor. It was the second time the loan's yield was increased by a quarter point.
The original spread was too low given the company's likely credit rating of "BB," two notches below investment grade, the sources said. Citigroup also will add a fee of 2% if the company prepays the loan in its first year; it would drop to 1% in the second year.