MSD Investment Corp., a business development company managed by BDT & MSD Partners LLC, completed a $300 million bond sale on Tuesday, issuing three-year investment-grade notes to refinance debt and support general corporate purposes.
The securities were sold at a yield 2.4 percentage points above comparable U.S. Treasuries, according to a person familiar with the transaction. That spread tightened from earlier conversations, during which the margin was discussed at roughly 2.7 percentage points.
Proceeds from the offering are intended to help repay existing obligations and to fund general corporate needs. Those purposes may include new investments in companies held within the business development company’s portfolio, the person said.
BDT & MSD Partners manages MSD Investment Corp. The merchant bank behind that management emerged in 2023 when MSD Partners combined operations with BDT & Co., the merchant bank associated with former Goldman Sachs banker Byron Trott. Michael Dell, founder and chief executive officer of Dell Technologies Inc., is identified as one of BDT & MSD’s largest investors.
Credit rating agencies are expected to assign investment-grade ratings to the notes, with Moody’s anticipated to rate them Baa3 and Fitch expected to assign a BBB- rating.
Context and mechanics
The issue was marketed as a three-year note and executed at a yield reflecting a 2.4 percentage point spread to Treasuries after the spread compressed during the placement process. The tightening from initial discussions near 2.7 percentage points indicates investor demand firmed as the deal progressed, according to the person with knowledge of the sale.
Issuer and ownership structure
MSD Investment Corp. operates as a business development company under the management of BDT & MSD Partners LLC. That management entity was formed following a 2023 combination linking MSD Partners with BDT & Co. The arrangement includes prominent investors; Michael Dell is noted as a major investor in BDT & MSD.
Ratings and intended use of proceeds
Rating expectations for the notes place them at the lower end of investment-grade by two agencies: Baa3 from Moody’s and BBB- from Fitch. The capital raised will be applied to refinance outstanding debt and for general corporate purposes, which may encompass further investments in the business development company’s portfolio holdings.