CF Plans to Sell Debt as Overseas Demand Wanes: New Issue Alert

CF Industries Holdings Inc. (CF), the fertilizer maker acquiring Terra Industries Inc., is marketing $1.6 billion of debt as overseas investors spurn the U.S. corporate bond market.

Proceeds will be used to repay money CF borrowed to finance the cash portion of its acquisition, the Deerfield, Illinois-based company said in a statement distributed by Business Wire.

Overseas investors were net sellers of U.S. corporate bonds for the nine months through February, according to a report by Bank of America Merrill Lynch analyst Mike Cho. Their outflow that month, the latest for which data is available, was $12 billion, compared with purchases of $48 billion of Treasury securities, the report said.

“It is the ninth consecutive monthly outflow, highlighting the prolonged lack of foreign demand for U.S. corporate bonds,” Cho said. European investors sold the most, $13 billion, in February while those in Japan and China sold about $500 million each, the report said.

The extra interest investors demand to own high-yield, high-risk corporate bonds instead of Treasuries rose 5 basis points to 557 basis points on April 16, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. A basis point is 0.01 percentage point. Junk bonds are rated below Baa3 by Moody’s Investors Service and BBB- by Standard and Poor’s. At the end of 2009, the spread 639 basis points.

Absolute yields on junk bonds fell to 8.291 percent from 8.317 percent, the lowest since July 2007, the index showed.

CF Offering

CF plans to sell eight-year and 10-year senior unsecured notes, according to a person familiar with the transaction. Morgan Stanley is underwriting the offering, which may be sold as soon as this week, said the person, who declined to be identified because terms aren’t set. The Deerfield, Illinois-based company also plans to offer 10.8 million shares to help pay for its $4.7 billion purchase of rival Terra.

Moody’s Investors Service rated CF’s proposed senior unsecured notes B1, four levels below investment-grade, while Standard & Poor’s assigned a BB+ ranking, one step below investment-grade.

C&S Groups Enterprises LLC sold $300 million of high yield seven-year notes, according to data compiled by Bloomberg, and Dewey & LeBoeuf LLP, a New York-based law firm, raised $125 million in a bond offering, according to two people familiar with the transaction.

No investment-grade debt was sold on April 16, Bloomberg data show.

Spreads on investment-grade U.S. corporate debt rose 1 basis point to 153 basis points, according to the Bank of America Merrill Lynch U.S Corporate Master Index.

Issuers sold $23.1 billion of U.S. corporate bonds last week, below the 2010 average of $24.2 billion and up from $17.6 billion the previous period.

Following is a description of at least $10.8 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

FIRSTRAND LTD. (FSR), South Africa’s second-largest banking group, plans a benchmark sale of five-year dollar bonds priced to yield 225 basis points more than similar-maturity Treasuries, according to a person familiar with the matter. JPMorgan Chase & Co., Mitsubishi UFJ Financial Group Inc., Standard Chartered Plc and UBS AG are managing the sale, another person said on April 7. A benchmark sale generally is at least $500 million.

SWEDEN plans to sell $1.4 billion of bonds due 2011, according to people with knowledge of the sale. Goldman Sachs Group Inc. and Nordea are managing the transaction, the people said.

EUROPEAN INVESTMENT BANK plans to sell $3 billion of three-year debt, according to a banker involved in the deal. The notes may be priced to yield about 5 basis points more than the benchmark mid-swap rate. Barclays Capital, Goldman Sachs Group Inc. and RBC Capital Markets are managing the issue.

FORETHOUGHT FINANCIAL GROUP INC. plans to sell $150 million of 10-year bonds, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. set. Standard & Poor’s assigned the notes a grade of BBB-in a March 24 report.

TRANSNET LTD. plans to sell $2 billion of international debt to help fund infrastructure spending, the company said in an e-mailed statement. A global medium-term note program set up on the London Stock Exchange will allow the South African state-owned transportation company to issue bonds in the U.S. or European debt markets.

Not Rated

AMERICOLD REALTY TRUST (ACRE), the operator of temperature-controlled warehouses owned by billionaire Ron Burkle’s Yucaipa Cos., plans to sell $300 million of 10-year notes, according to a person familiar with the transaction. Proceeds from the sale of senior secured debt will be used to purchase assets from Versacold International Corp., said the person, who declined to be identified because terms aren’t set. Yucaipa owns 49 percent of Versacold with an option to purchase the rest, according to an April 15 filing with the Securities and Exchange Commission.

PENN VIRGINIA RESOURCE PARTNERS LP plans to sell $300 million of senior notes due in 2018, according to a statement distributed by Business Wire. Bank of America Merrill Lynch, JPMorgan Chase & Co., Royal Bank of Canada and Wells Fargo & Co. are underwriting the offering, the company said.

REYNOLDS GROUP HOLDINGS LTD., the maker of Reynolds Wrap plastic wrap, said it plans to acquire the Evergreen Packaging group of companies and a New Zealand paper mill from Carter Holt Harvey Ltd. Reynolds Group plans to borrow $1.75 billion to pay for the acquisition of Evergreen and the Whakatane Mill, it said in a statement distributed by Business Wire. The Auckland, New Zealand-based company plans to sell $1 billion of bonds and will seek $750 million of bank loans, said a person familiar with the offering who declined to be identified because terms aren’t set.

RENAISSANCE CAPITAL, the commercial banking arm of Renaissance Group, is selling $225 million of three-year bonds with a 13 percent coupon, according to a banker with knowledge of the transaction.

The PROVINCE OF CORDOBA, Argentina, plans to sell as much as $350 million of bonds in international markets once the federal government completes a restructuring of defaulted debt, Banco de Cordoba said.

SENSIENT TECHNOLOGIES CORP. said it entered into an agreement with a group of four financial institutions for the issuance of $110 million in fixed-rate, senior notes, according to a Nov. 19 statement distributed by Business Wire. The company will issue seven-year debt in May with a fixed coupon rate of 4.91 percent and proceeds will be used to repay existing indebtedness, Sensient said in a March 1 regulatory filing.

High Yield

ALLBRITTON COMMUNICATIONS CO. plans to sell $455 million of eight-year notes in a private placement, the company said in an e-mailed statement. Proceeds from the sale will be used to buy back the broadcast company’s 7.75 percent notes maturing in 2012, the company said.

BANCO INDUSTRIAL E COMERCIAL SA (BICB3), the Sao Paulo-based lender known as BicBanco, may pay a yield of about 8.75 percent on its offering of 10-year dollar bonds, according to a person familiar with the offering. HSBC Holdings Plc, JPMorgan Chase & Co. and Standard Chartered Plc are underwriting the sale of unsecured subordinated notes, said the person, who declined to be identified because terms aren’t set.

CF INDUSTRIES HOLDINGS INC., which is acquiring Terra Industries Inc., plans to sell $1.6 billion of debt and 10.8 million shares to help pay for its $4.7 billion purchase of the rival fertilizer producer.

GLORIOUS PROPERTY HOLDINGS LTD. (845) plans its first sale of bonds denominated in U.S. dollars, according to a person familiar with the matter who declined to be identified before a public announcement. Glorious said in a filing that it had hired Deutsche Bank AG, JPMorgan Chase & Co. and Standard Chartered Bank to manage the offering.

INTERNATIONAL WIRE GROUP INC. (ITWG) plans to sell $140 million of senior secured notes due in 2015, according to a company statement distributed by Business Wire. Proceeds will be used to redeem $75 million of outstanding 10 percent notes due in 2011 and to pay a dividend of $5.46 a share, according to the statement.

ATP OIL & GAS CORP. plans to issue $1.5 billion of senior second-lien notes due in 2015, according to a company statement. Proceeds will be used to repay existing senior secured term loans and for general corporate purposes, the Houston-based energy producer said in a statement distributed by Business Wire.

EXPORT-IMPORT BANK OF UKRAINE plans to sell $500 million of five-year bonds that may be priced to yield about 8.5 percent, according to people with knowledge of the sale. Citigroup Inc. and Credit Suisse Group AG are managing the sale of the notes, which will be issued through Biz Finance Plc.

CLEAVER-BROOKS INC. plans to sell $200 million of six-year senior secured notes, according to a person familiar with the offering. The debt is non-callable for three years, said the person, who declined to be identified because terms aren’t set. Proceeds will be used to repay debt and to pay a dividend, the person said.

ESSAR STEEL HOLDINGS LTD. plans to raise at least $750 million through a sale of bonds denominated in U.S. dollars, according to a person familiar with the matter. Essar said in an e-mailed statement that it plans to issue senior unsecured notes due 2017. The company said it intends to use proceeds to refinance existing debt and for potential acquisitions.

TELCORDIA TECHNOLOGIES INC. may sell $300 million of second-lien notes to refinance debt, according to two people familiar with the transactions who declined to be identified because the details aren’t set. The Piscataway, New Jersey-based developer of communications software and services said in an April 9 statement that it’s weighing a new credit agreement and note sale to purchase $809.7 million of bonds. Graham Ackerman, a company spokesman, said April 13, that the company was seeking a $500 million term loan and $80 million revolving line of credit.

GLOBAL GEOPHYSICAL SERVICES INC. may sell $200 million of notes due in 2017, according to a person familiar with the transaction. Proceeds from the sale will be used to repay debt and for general corporate purposes, said the person, who declined to be identified because terms aren’t set.

MERGE HEALTHCARE INC. (MRGE) plans to sell $200 million of senior secured notes due in 2015, according to a company statement. Proceeds will be used to fund its proposed acquisition of Amicas Inc., the company said.

LEARNING CARE GROUP NO. 2 INC. is planning to sell $265million of payment-in-kind notes that can pay interest in the form of added debt, according to a person familiar with the transaction. The company plans to issue five-year senior secured notes, of which 10.5 percent can be paid in cash and 2.5 percent in additional debt, said the person, who declined to be identified because terms aren’t set.

COMMUNITY EDUCATION CENTERS INC. plans to sell $210 million of six-year, senior secured notes that may yield 12.75 percent to 13 percent, according to a person familiar with the offering. The notes, which can’t be called for the first 3.5 years, will be sold in a private placement, said the person familiar with the transaction. The company initially planned to sell the debt in a so-called 144A offering, will borrow the money through a private offering. Proceeds from the sale may be used to repay debt, the person said. Jefferies & Co. is underwriting the sale, the person said.

PT CILIANDRA PERKASA, an Indonesian palm-oil company, may sell dollar bonds, a person familiar with the matter said. Ciliandra is a unit of Singapore-based First Resources Ltd.

AO ASTANA FINANCE will offer senior creditors $350 million of new bonds, as well as recovery notes and 58.9 percent of voting shares, the lender said in a statement published through the Kazakhstan Stock Exchange. Holders of Astana Finance’s domestic notes will be offered 20-year tenge-denominated bonds with an 8 percent coupon, the lender said in the statement, which was dated Oct. 16.

The DOMINICAN REPUBLIC may sell as much as $600 million of bonds, said Roberto Cabanas, head of general financing at the Public Credit Office. The government hired Barclays Plc and Citigroup Inc. to arrange the country’s first international dollar bond sale in more than three years. The country is rated B2 by Moody’s and B by S&P.

Offerings in Pipeline

AXIATA GROUP BHD. (AXIATA), Southeast Asia’s second-largest mobile-phone operator, plans to raise $300 million to strengthen its capital through the first dollar bond sale by a Malaysian company in 2010. Goldman Sachs Group Inc. and Morgan Stanley will help the Kuala Lumpur-based company issue 10-year, fixed-rate notes, Axiata said in a stock exchange filing.

KAZMUNAIGAZ NATIONAL CO., a Kazakh state-owned energy company, has hired Citigroup Inc., Credit Suisse Group AG and Royal Bank of Scotland Group Plc to arrange a sale of dollar bonds, according to a banker with knowledge of the transaction. The bonds are expected to be sold following investor meetings in Europe and the U.S., the banker said.

KOREA FINANCE CORP. plans to sell $100 million to $200 million of foreign-currency bonds next month in its first overseas debt sale since October, Edaily reported, without citing anyone. The state-run agency also plans to sell $1 billion of global bonds in the U.S. in the second half of the year, the Korean-language online newspaper said.

NATIONAL AGRICULTURAL COOPERATIVE FEDERATION of South Korea, also known as Nonghyup, plans to raise as much as $500 million from foreign-currency bonds to repay debt, according to a person with direct knowledge of the matter. The federation, which provides credit and banking services to farmers, plans to sell notes to help refinance about $600 million of bonds and loans, said the person, who asked not to be named as the plan is private. The bonds will probably be denominated in dollars, they said.

YANLORD LAND GROUP LTD. (YLLG), a Singapore-based developer of residential projects in China, hired HSBC Holdings Plc and Royal Bank of Scotland Group Plc to help it sell dollar bonds. The company will meet with bond investors beginning April 20, Yanlord said in a statement to the Singapore stock exchange.

PTT PRODUCTION & EXPLORATION PCL (PTTEP), the Thai oil explorer, hired Credit Suisse Group AG and Royal Bank of Scotland Group Plc to help it sell global bonds, according to two people familiar with the matter who asked not to be identified as the plan is private.

KAISA GROUP HOLDINGS LTD. (1638), a developer in China’s Pearl River Delta, hired Credit Suisse Group AG, Citigroup Inc. and UBS Group AG to help it sell senior notes denominated in U.S. dollars. Proceeds will be used to repay debt including an $86 million loan as well as to finance real estate projects, the company said in a statement to the Hong Kong stock exchange.

UNION BANK OF INDIA LTD. (UNBK) plans to sell bonds denominated in U.S. dollars, according to a person familiar with the matter. Barclays Plc, Citigroup Inc., Deutsche Bank AG and Standard Chartered Plc will manage the sale, the person said.

MALAYSIA will “most probably” sell global Islamic bonds denominated in dollars, Prime Minister Najib Razak said.

POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORP. of the Philippines sell between $750 million and $1.5 billion of dollar-denominated bonds “anytime” to help refinance maturing debt thru next year, Vice Chairman Jose Ibazeta said. The company manages the finances of state utility National Power Corp.

BRISBANE AIRPORT CORP., owner of Australia’s third-busiest airport, may sell bonds in the U.S. later this year as it pursues new markets to help refinance debt and pay for a new runway. The company is considering a 10- or 15-year U.S. private placement and a five- to seven-year Australian dollar bond sale in late 2010 or early 2011, Chief Financial Officer Tim Rothwell said in a phone interview from Brisbane.

VIETNAM NATIONAL COAL-MINERAL INDUSTRIES GROUP, the state-owned coal producer known as Vinacomin, plans to sell as much as $500 million of bonds overseas this year to fund mining and energy projects, according to Deputy Chief Executive Officer Nguyen Van Hai.

The PHILIPPINES plans to sell $500 million of dollar-denominated bonds to overseas nationals and may sell up to $1 billion, Deputy National Treasurer Eduardo Mendiola said. The bond sale gives the government “flexibility” in domestic borrowing, Mendiola said in an interview. It may reduce second-and third-quarter domestic borrowing and reject bids at Treasury auctions, he said.

UNO RESTAURANT HOLDINGS CORP., the operator and franchisor of 170 pizzerias, filed a Chapter 11 reorganization plan that calls for a $27 million offering of notes. The Boston-based company’s rights offering of second-lien notes would enable it to repay an outstanding loan and exit Chapter 11, it said in court papers filed in U.S. Bankruptcy Court in Manhattan. Secured debt holders Twin Haven Capital Partners LLC and Coliseum Capital Management LLC have agreed to backstop the notes offering.

FINLAND may sell five-year bonds denominated in dollars this year, the Finnish Treasury said in a document posted on its Web site.

POLAND may sell around $1 billion of bonds in dollars and about $500 million denominated in yen by the middle of the year, Deputy Finance Minister Dominik Radziwill told Dziennik Gazeta Prawna in an interview. Poland is unlikely to sell more bonds to international investors after the sales, which will meet the country’s foreign debt-service needs for this year, Radziwill told the newspaper.

SONGA OFFSHORE SE (SONG) postponed its plans to issue $200 million of debt, but may return to the market in March with a larger offer, according to a person familiar with the transaction. In January, Songa hired Citigroup Inc. to issue seven-year bonds to repay existing debt and for general corporate purposes, it said in a statement.

HUDSON PRODUCTS HOLDINGS INC. postponed its $250 million sale of six-year notes due to market conditions, according to a person familiar with the transaction. Hudson began marketing the six-year senior secured second-lien notes on Jan. 26, according to a person familiar with the offering. It has not specified when it plans to return to the debt market to sell high-yield notes.

MONGOLIA plans to sell as much as $1.2 billion of bonds overseas later this year to fund infrastructure to support its mining industry, Finance Minister Sangajav Bayartsogt said. This is Mongolia’s first benchmark offering of dollar-denominated debt. Investment banks are advising Mongolia to issue debt with maturities of between five and 10 years, Bayartsogt said in an interview. The securities may offer a yield of between 8 percent and 11 percent, he said.

KOREA HYDRO & NUCLEAR POWER CO., a unit of state-run Korea Electric Power Corp., delayed a planned foreign-currency bond sale until after the first quarter, according to two people with direct knowledge of the matter.

BIRCH COMMUNICATIONS INC. is offering $100 million of senior secured notes due in 2015, with proceeds going toward refinancing debt, buying outstanding warrants for its common stock and general corporate purposes, including acquisitions, the Atlanta-based company said Nov. 30 in a statement. On Feb. 1, Moody’s withdrew its B3 rating assigned to the company’s notes, citing “recent indications” that Birch “will complete its note issuance under terms that are different than those that supported the rating assignment,” analysts Gerald Grnovsky and Russell Solomon wrote in a note. Birch is rated B- by S&P, the ratings company wrote Dec. 4 in a statement. “We’re currently holding discussions with interested parties and expect to finalize our offering in the near term,” Greg Corwin, director of marketing for Birch, said in a Jan. 11 telephone interview. Corwin said the status of the deal was “unchanged” in a Feb. 17 interview.

(Updated Feb. 17.)

VIETNAM SHIPBUILDING INDUSTRY GROUP, the state-owned company known as Vinashin, won government approval to sell as much as $600 million of bonds overseas to fund construction of ships. Vinashin plans to raise between $400 million and $600 million in a dollar-denominated bond sale “with a government guarantee,” Chief Business Officer Nguyen Quoc Anh said in a phone interview from the northern port province of Quang Ninh.

ANGOLA may begin the sale of international bonds by the end of June, Reuters reported, citing people it didn’t identify. The African country “is on course to get” its first credit rating from an international agency as it prepares to sell bonds abroad, Aguinaldo Jaime, director of state-run National Investment Agency, said Feb. 12. Angola previously sought to sell $4 billion of debt in an offering first announced in August. The deal was later postponed.

ALROSA, Russia’s diamond monopoly, may sell as much as $1 billion in foreign-currency bonds in the second half of 2010, RIA Novosti reported, citing Chief Executive Officer Fyodor Andreyev. The company is rated Ba3 by Moody’s.

To contact the reporter on this story: Tian Huang in New York at thuang57@bloomberg.net.

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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