MSD Investment Closes $350 Million Note Deal, Swaps Fixed Coupon to Floating Rate
The closing terms also name the six banks that led the private placement and commit MSD to a registered exchange offer within a year.
October 16, 2026
MSD Investment Corp. has closed its $350 million offering of 6.875% notes due 2029 and, alongside the deal, entered into an interest rate swap that effectively converts the fixed coupon into a floating rate tied to SOFR.
Matching Debt to a Floating-Rate Portfolio
The swap carries a $350 million notional amount and matures on October 15, 2029, the same day as the notes. MSD will receive fixed payments at 6.875% and pay a variable rate based on three-month daily compounded SOFR plus 2.138%, with both legs settling semiannually.
The company said the hedge is meant to align the interest rates on its liabilities with its investment portfolio, which consists predominantly of floating-rate loans. In practice, MSD's cost on the new notes will now move with short-term rates instead of staying fixed. If SOFR declines, the company's net payment on this debt falls along with the income its floating-rate loans generate. If rates rise, both move higher.
Final Terms of the Notes
MSD priced the notes on October 7, and the deal closed on October 15. Key terms:
- The notes are direct unsecured obligations of the company.
- Interest is paid each April 15 and October 15, beginning April 15, 2027.
- MSD may redeem the notes in whole or in part at any time at the redemption price set in the governing indenture.
- If MSD undergoes a change of control and the notes are rated below investment grade by Fitch and Moody's, the company must offer to buy them back at 100% of principal plus accrued and unpaid interest.
Banks and Registration
Citizens JMP Securities, LLC, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, RBC Capital Markets, LLC and SMBC Nikko Securities America, Inc. acted as representatives of the initial purchasers. The initial purchasers bought the notes in a private placement for resale to qualified institutional buyers under Rule 144A and to certain non-U.S. persons under Regulation S.
Because the notes were not registered under the Securities Act, MSD agreed to file a registration statement for an offer to exchange them for registered notes with substantially identical terms. The company must use commercially reasonable efforts to complete that exchange no later than 365 days after the notes were issued, and it will owe additional interest to noteholders if it falls short.
Use of Proceeds
MSD expects to use the net proceeds to repay certain outstanding borrowings under its debt facilities and for general corporate purposes, including investing in portfolio companies in line with its investment objective.
