Royalty Pharma Announces Pricing of $1.5 Billion of Senior Unsecured Notes
Royalty Pharma (Nasdaq: RPRX) announced the pricing of $1.5 billion in senior unsecured notes.
The offering includes $500 million of 5.150% Notes due 2029, $500 million of 5.400% Notes due 2034, and $500 million of 5.900% Notes due 2054. These notes will be guaranteed by Royalty Pharma Holdings.
The transaction is expected to close on June 10, 2024. Proceeds will be used for general corporate purposes.
Major financial institutions such as BofA Securities, Citigroup, and J.P. Morgan are among the joint lead book-running managers.
- Raised $1.5 billion through senior unsecured notes.
- Notes come with varying maturity dates (2029, 2034, 2054) providing a diversified debt structure.
- Interest rates set at competitive terms: 5.150%, 5.400%, and 5.900%.
- Proceeds earmarked for general corporate purposes, offering financial flexibility.
- Guaranteed by Royalty Pharma Holdings, enhancing credit security.
- Increased debt load by $1.5 billion, raising leverage ratios.
- Senior unsecured notes imply potential higher cost of debt.
- Long-term financial commitment until 2054, adding future financial obligations.
Insights
Royalty Pharma's announcement regarding the pricing of $1.5 billion in senior unsecured notes is significant from a financial standpoint. This offering is segmented into three tranches: $500 million of 5.150% Notes due 2029, $500 million of 5.400% Notes due 2034 and $500 million of 5.900% Notes due 2054. Senior unsecured notes imply that these debts are not backed by collateral, which may affect their risk profile.
The interest rates on these notes are fairly moderate, reflecting current market conditions. The allocation of longer-term debts, particularly the 30-year notes, suggests that Royalty Pharma is looking to secure long-term capital at relatively attractive rates. However, investors should be cautious about the lack of specified use beyond 'general corporate purposes,' which can be vague.
For retail investors, the key takeaway is the company's ability to raise a substantial amount of capital. This can be interpreted as both a positive signal of operational strength and a potential red flag if the funds are used inefficiently. Nonetheless, the involvement of heavyweight financial institutions in underwriting this offer adds credibility and stability to the process.
Royalty Pharma’s debt offering also gives insight into market sentiment and the company's strategic positioning within the pharmaceutical royalty space. The steep demand for these notes may indicate strong investor confidence in Royalty Pharma's business model, which involves purchasing biopharmaceutical royalties and funding innovation in the sector.
From a market perspective, the pricing of these notes at relatively high interest rates could reflect the broader economic environment marked by inflationary pressures and rising borrowing costs. These rates are higher than what might have been seen in previous years, which suggests adjusted expectations for economic stability and corporate performance.
Long-term investors should note the potential for these funds to be used in acquiring new revenue-generating assets, though the broad term 'general corporate purposes' leaves some uncertainty. The market's positive reception, as inferred from the successful pricing, indicates perceived stability and growth potential in Royalty Pharma's future operations.
NEW YORK, June 03, 2024 (GLOBE NEWSWIRE) -- Royalty Pharma plc (Nasdaq: RPRX) announced today that it has priced an offering of
$500 million of5.150% Notes due 2029 (the “2029 Notes”);$500 million of5.400% Notes due 2034 (the “2034 Notes”); and$500 million of5.900% Notes due 2054 (the “2054 Notes”).
The Notes will be guaranteed on a senior unsecured basis by Royalty Pharma Holdings Ltd. The offering is expected to close on June 10, 2024, subject to the satisfaction of customary closing conditions.
Royalty Pharma intends to use the net proceeds from the Notes for general corporate purposes.
BofA Securities, Citigroup, J.P. Morgan, Morgan Stanley and TD Securities are acting as joint lead book-running managers and as representatives of the underwriters for the offering. DNB Markets, SMBC Nikko, SOCIETE GENERALE, US Bancorp, Academy Securities, AmeriVet Securities, Blaylock Van, LLC, Cabrera Capital Markets LLC, Drexel Hamilton, R. Seelaus & Co., LLC, Ramirez & Co., Inc., Siebert Williams Bank and Tigress Financial Partners are acting as co-managers for the offering.
The Notes are being offered pursuant to an effective shelf registration statement that the Company filed with the Securities and Exchange Commission (the “SEC”). The offering is being made only by means of a preliminary prospectus supplement and accompanying prospectus. A preliminary prospectus supplement and accompanying prospectus relating to the offering have been filed with the SEC and are available free of charge on the SEC’s website at http://www.sec.gov. The final prospectus supplement and accompanying prospectus relating to the offering will be filed with the SEC and may also be obtained, when available, by contacting: BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte, NC, 28255-0001, Attention: Prospectus Department, Email: dg.prospectus_requests@bofa.com; Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717 (Tel: 800-831-9146) or by e-mail at prospectus@citi.com; J.P. Morgan Securities LLC, Attention: Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, by email at prospectus-eq_fi@jpmchase.com; Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, Second Floor, New York, New York 10014, by telephone at 1-866-718-1649 or by e-mail at prospectus@morganstanley.com; or TD Securities (USA) LLC, 1 Vanderbilt Avenue, New York, New York 10017, by telephone at (855) 495-9846.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the Notes, nor will there be any sale of these Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About Royalty Pharma
Founded in 1996, Royalty Pharma is the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry, collaborating with innovators from academic institutions, research hospitals and non-profits through small and mid-cap biotechnology companies to leading global pharmaceutical companies. Royalty Pharma has assembled a portfolio of royalties which entitles it to payments based directly on the top-line sales of many of the industry’s leading therapies. Royalty Pharma funds innovation in the biopharmaceutical industry both directly and indirectly -directly when it partners with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when it acquires existing royalties from the original innovators. Royalty Pharma’s current portfolio includes royalties on more than 35 commercial products, including Vertex’s Trikafta, GSK’s Trelegy, Roche’s Evrysdi, Johnson & Johnson’s Tremfya, Biogen’s Tysabri and Spinraza, AbbVie and Johnson & Johnson’s Imbruvica, Astellas and Pfizer’s Xtandi, Novartis’ Promacta, Pfizer’s Nurtec ODT and Gilead’s Trodelvy, and 17 development-stage product candidates.
Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements” as that term is defined in the United States Private Securities Litigation Reform Act of 1995, including statements regarding the receipt and use of the net proceeds from the offering of the Notes, and statements that express the company’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Examples include discussion of our strategies, financing plans, growth opportunities and market growth. In some cases, you can identify such forward-looking statements by terminology such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project,” “expect,” “may,” “will,” “would,” “could” or “should,” the negative of these terms or similar expressions. Forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to the company. However, these forward-looking statements are not a guarantee of our performance, and you should not place undue reliance on such statements. Forward-looking statements are subject to many risks, uncertainties and other variable circumstances, and other factors. Such risks and uncertainties may cause the statements to be inaccurate and readers are cautioned not to place undue reliance on such statements. Many of these risks are outside of the company’s control and could cause its actual results to differ materially from those it thought would occur. The forward-looking statements included in this document are made only as of the date hereof. The company does not undertake, and specifically declines, any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments, except as required by law.
Royalty Pharma Investor Relations and Communications:
+1 (212) 883-6637
ir@royaltypharma.com
FAQ
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