Popular fast-food chain Raising Cane’s successfully placed a $500 million leveraged loan on Tuesday. Given strong demand from investors, the Baton Rouge, Louisiana-based company was able to shorten the interest rate terms. The seven-year secured term loan was issued at a rate 2 percentage points above the secured overnight financing rate (SOFR). The loan was issued with a discount factor of 99.75 cents on the dollar, according to a person familiar with the matter. The original target was a range of 2.25 to 2.5 percentage points above the benchmark and a discount factor of 99.5 cents, but high demand made more attractive terms. A spokesman for Bank of America, which managed the deal, declined to comment. Raising Cane’s also declined to comment. The U.S. leveraged loan market has posted yields of over 6 percent this year, driven by rising interest rates and a shortage of new business. In the secondary market, prices for riskier loans climbed to just under 97 cents on the dollar after a decline in August. The underwriting market revived in September as companies seek to secure financing ahead of looming economic uncertainty and the U.S. election. More than $56 billion in deals have been completed so far, according to Bloomberg data. The loan marks Raising Cane’s’ second foray into the public debt market, following a high-yield bond late last year. Proceeds could be used to pay down $354 million in debt from an existing $1.2 billion revolving credit facility, according to S&P Global Ratings. The chain, known for its chicken dishes and dipping sauces, has expanded rapidly in recent years and now has more than 800 locations worldwide. The success has made founder Todd Graves, who held about 90 percent of the shares last year, a multi-billionaire, according to the Bloomberg Billionaires Index. S&P analysts led by Emal Wafajow stressed in a note that Raising Cane’s is pursuing an aggressive growth and dividend policy, with annual capital expenditure (capex) of $700 million and increasing dividends. The analyst firm forecasts stable growth and margins next year, with the leverage ratio – the ratio of debt to earnings – remaining in the high triple range through 2026.
