Apollo Global Management Inc. priced $600 million of 30-year junior subordinated notes on Monday, tapping the hybrid-debt market to help pay for its planned investment in the asset-management arm of Abu Dhabi’s Mubadala Capital.
The notes, due 2056, carry a fixed 7.55% coupon until Dec. 15, 2036. After that the rate resets every five years at the five-year Treasury yield plus 2.672 percentage points. Apollo can defer interest payments, and the securities rank below its senior debt, features that lead rating firms to treat part of such hybrids as equity. Certain Apollo subsidiaries that back its other bonds will guarantee the notes.
Proceeds and timing
Apollo expects net proceeds of about $594 million after underwriting fees. It plans to use the money for general corporate purposes, including the Mubadala Capital Asset Management investment and related costs. J.P. Morgan, BofA Securities, Morgan Stanley and Wells Fargo Securities ran the books, and the sale is expected to settle on Nov. 13.
The deal comes as the largest private-capital firms lean on public bond markets to fund growth. Apollo has been active on that front in recent weeks, including a 10 billion euro European credit vehicle and its role in a $40 billion GPU leasing deal with SpaceX.
