Nov. 14 (Bloomberg) — A unit of Scientific Games Corp. sold $2.2 billion of senior unsecured bonds at the U.S. market’s biggest discount from face value in 2014 to help fund its acquisition of Bally Technologies Inc.

SGMS Escrow Corp. sold the notes maturing in December 2022 at 89.865 cents on the dollar to yield 12 percent, according to a person with knowledge of the transaction who asked not to be identified, citing lack of authorization to speak publicly.

The banks underwriting Scientific Games’s $5.1 billion purchase of Bally committed to provide financing for the deal. The company agreed to pay interest rates on its new debt of no more than 9.75 percent, two people familiar with the transaction told Bloomberg last month.

The underwriters marketed the notes at yields of 10 percent to 11 percent this week, three people who were offered the debt told Bloomberg yesterday. To raise the interest rate, the banks had to reduce the price of the bonds, eroding their underwriting fees, or, at worst, leading to losses.

The company also sold $950 million of 7 percent secured notes maturing in January 2022 at face value, according to data compiled by Bloomberg. That’s up from an initially marketed size of $700 million, according to a person with knowledge of the sale.
To contact the reporter on this story: Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net Mitchell Martin, Faris Khan