May 29 (Bloomberg) -- Daiichi Sankyo Co., Japan’s third-largest drugmaker, plans to sell bonds to refinance a loan taken for its $5 billion acquisition of Ranbaxy Laboratories Ltd., India’s biggest pharmaceuticals company.

Daiichi Sankyo hired Nomura Holdings Inc. and Daiwa Securities Group Inc. to manage the sale, Satoru Ogawa, a spokesman at the Tokyo-based drugmaker, said by telephone today.

“We plan to sell bonds as soon as possible to repay the borrowing,” said Ogawa. The size of the bond sale, the company’s first issue of non-convertible debt, hasn’t been decided, he said.

Daiichi Sankyo joins its Japanese rival Eisai Co. in selling bonds to help finance acquisitions. Four Japanese drugmakers have made multi-billion-dollar takeovers in the past two years to expand their product line-ups and reduce reliance on the domestic market, where the government has mandated price cuts for some drugs.

Concern about Japanese corporate credit risk has eased with the Market iTraxx Japan dropping 7 basis points to 175.3 in Tokyo today, compared with a high of 437 basis points on April 1.

“Daiichi Sankyo probably wants to take advantage of the good market environment now,” Fumihito Gotoh, head of Japan’s credit research for UBS AG, said in a phone interview. “There’s also a concern that interest rates might rise in the future.”

The company decided to buy Ranbaxy last June to enter the market for lower-priced generic medicines. Daiichi Sankyo, which paid 488.3 billion yen ($5.05 billion) for the acquisition, has written down 351.3 billion yen because of a slump in Ranbaxy’s share price.

Two Years

Daiichi Sankyo registered to sell as much as 300 billion yen in bonds, according to a filing with Japan’s finance ministry today. The registration allows the company to sell bonds within two years of June 6, the document said.

The drugmaker borrowed 210 billion yen to finance the acquisition, it said in a document filed to Japan’s finance ministry in November.

Eisai, the Japanese drugmaker that bought MGI Pharma Inc. to obtain cancer medicines, sold 120 billion yen of bonds in May last year to help finance that $3.9 billion deal.

Shionogi & Co., which bought Sciele Pharma Inc. in October for $1.5 billion, hired Nomura Securities Co. and Daiwa Securities SMBC Co. to manage a sale of bonds, said a Nomura banker who asked not to be named pending a formal announcement earlier this week. Shionogi filed a shelf registration to sell up to 30 billion yen in bonds during the two-year period starting June 2.

Moody’s Investors Services cut its issuer rating on Daiichi Sankyo by one notch to A1 from Aa3 on Jan. 19, citing the company’s rising debt and weakened equity structure as a result of the Ranbaxy deal. Moody’s said the outlook for the rating was stable.

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net; Takashi Ueno in Tokyo at at tueno@bloomberg.net.

Last Updated: May 29, 2009 04:27 EDT