Gentiva plans to sell about $305 million of senior unsecured notes to help finance its $1 billion acquisition of hospice-services provider Odyssey HealthCare, the Atlanta-based company said in a May 24 regulatory filing, without specifying the timing of the sale.
Company debt sales revived yesterday, led by an issue from Wal-Mart Stores Inc., the world’s largest retailer, after a report showed business activity in the U.S. expanded in June for a ninth straight month and the European Central Bank said it will lend less to banks than economists forecast, spurring investor confidence in the region’s financial industry.
“Wal-Mart is a big deal, a big name, especially for money managers limited in investing in high-quality, A-rated paper,” said Rajeev Sharma, a money manager who oversees $1.4 billion of investment-grade debt at First Investors Management Co. in New York. “There is plenty of money on the sidelines, and high- quality deals will do well under the current market environment and find support.”
Companies issued $6.68 billion of debt yesterday, the busiest since June 21, when they sold $10.5 billion of bonds, according to data compiled by Bloomberg. Global bond sales fell 39 percent to $1.17 trillion in the first half of the year from the similar period in 2009, the least since 2004, according to data compiled by Bloomberg.
Wal-Mart sold $3 billion of bonds in a three-part offering yesterday, the company’s biggest issue since April 2008, according to data compiled by Bloomberg. The Bentonville, Arkansas-based retailer’s debt sale was the largest by a non- financial U.S. company since Discovery Communications issued $3 billion of debt on May 26, Bloomberg data show.
The extra yield investors demand to own investment-grade debt instead of Treasury bonds was unchanged at 209 basis points, according to Bank of America Merrill Lynch’s U.S. Corporate Master index. That compares with the 2010 low of 151 basis points on April 21.
Some weak U.S. economic data and Europe’s sovereign debt crisis “have resulted in a repricing of risk,” Mark Oline, head of corporate ratings at Fitch Ratings in New York, wrote in a June 29 report. “The markets continue to remain open for those willing to pay higher coupons.”
The spread on high-risk, high-yield debt widened 7 basis points to 713 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. That’s 171 basis points from the year’s 542 basis-point low on April 26. Junk bonds are rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s. A basis point is 0.01 percentage point.
Gentiva agreed to purchase Odyssey HealthCare in May to expand in hospice care to 20 states. The combination will create the biggest U.S. hospice and home health-care provider, the companies said in a May 24 statement.
Moody’s assigned the company a Ba3 rating, three levels below investment-grade, and S&P rates it B+, one step lower, Bloomberg data show.
S&P’s rating “incorporates prospects for health reform- related rate cuts over the next few years and Gentiva’s demonstrated interest in aggressively broadening its operating base by way of debt financing,” analysts wrote in a June 29 note.
Following is a description of at least $4.02 billion of pending sales of dollar-denominated bonds in the U.S.
Following is a description of at least $4.02 billion of pending sales of dollar-denominated bonds in the U.S.
VNESHECONOMBANK, the Russian state bank, plans to sell 10- year loan participation notes denominated in U.S. dollars, according to a banker involved in the transaction. Barclays Capital, Citigroup Inc., HSBC Holdings Plc and Societe Generale SA are managing the sale, the banker said.
CHILE plans to sell $1 billion of 10-year bonds, along with warrants and peso debt, according to a filing with the U.S. Securities and Exchange Commission. Chile will use the proceeds for general purposes, the filing said. The country, which hasn’t sold international bonds in six years, is seeking financing for repairs after a Feb. 27 earthquake and subsequent tsunami killed more than 400 people and caused as much as $30 billion of damage.
DOHA BANK QSC, Qatar’s third-largest bank, may raise as much as $1 billion from bond sales, its chief executive officer said. The money is likely to be raised for five years and is meant to “fix the maturity mismatch” on the bank’s balance sheet, Raghavan Seetharaman said in a June 16 telephone interview from Doha. The bank hasn’t decided which currency to sell the bonds in, he said. The lender said in April that it planned to sell senior notes in dollars in a statement on the Qatari bourse, without disclosing the size of the offering.
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. S&P assigned the notes a grade of BBB- in a March 24 report.
ARBEJDERNES LANDSBANK may sell three-year debt in U.S. dollars, according to a person familiar with the offering. BNP Paribas and Nordea Bank AB will manage the offering, said the person, who declined to be identified because terms aren’t set.
POSTMEDIA NETWORK INC. plans to sell $275 million of eight- year notes, according to a person familiar with the offering. Proceeds will be used to acquire assets of Canwest LP, said the person, who declined to be identified because terms aren’t set.
OXEA FINANCE & CY S.C.A. plans to sell the equivalent of 500 million euros of seven-year bonds in dollars and euros, according to two people with knowledge of the offering. Proceeds will be used to repay debt, shareholder loans and a payment to shareholders, and for general corporate purposes, the people said.
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 plans to issue seven-year debt to repay existing indebtedness, Sensient said in a March 1 regulatory filing.
GENTIVA HEALTH SERVICES INC., the U.S. home-nursing company that is buying Odyssey HealthCare Inc., plans to sell $305 million of eight-year notes, the Atlanta-based company said in a May 24 regulatory filing, without specifying the timing of the transaction. Proceeds will be used to help fund the takeover, according to the filing. Standard & Poor’s assigned the unsecured notes a B- credit rating on June 29. Moody’s Investors Service rated the notes a grade of B2 and ranked $925 million of loans three steps higher at Ba2, it said in a report.
UNIVERSAL HEALTH SERVICES INC., the operator of more than 100 U.S. medical facilities that’s buying Psychiatric Solutions Inc., plans to sell $400 million of senior unsecured debt to help finance the acquisition, it said in a filing with the Securities and Exchange Commission.
PROMSVYAZBANK OJSC, Russia’s third-largest private bank, plans to sell six-year bonds in dollars, according to two people with knowledge of the sale. S&P affirmed its B counterparty credit rating on the company in April and revised its outlook to positive from stable, citing “improved liquidity and strengthening risk management.”
CKE RESTAURANTS INC. may sell $600 million of eight-year notes, according to a person familiar with the transaction. The senior secured second-lien notes may be sold next week, said the person, who declined to be identified because terms aren’t set.
AKBANK TAS, the Turkish bank part-owned by Citigroup Inc., plans to sell five-year, dollar-denominated eurobonds worth up to $1 billion, according to a filing with the Istanbul Stock Exchange.
CEDAR FAIR ENTERTAINMENT CO., the operator of amusement parks that called off a takeover by an Apollo Management LP affiliate, said it plans to sell $500 million of senior unsecured notes due in 2020. Proceeds will be used to repay existing debt, the Sandusky, Ohio-based company said in a May 20 statement distributed by PR Newswire.
IRSA INVERSIONES Y REPRESENTACIONES SA, Argentina’s biggest real-estate company, extended an offer to sell $250 million in 10-year bonds until June 24, the company said in a regulatory filing in Buenos Aires on June 14. S&P assigned the notes a grade of B-, six steps below investment quality.
TITAN INTERNATIONAL INC., the maker of tire and wheel systems for off-highway equipment, said it plans to sell at least $150 million of senior unsecured notes. Proceeds will be used to repurchase the 8 percent senior unsecured notes due in 2012 and for general corporate purposes, the Quincy, Illinois- based company said in a May 13 statement distributed by Business Wire.
INVENTIV HEALTH INC., the provider of sales and marketing services to science companies that is being acquired by Thomas H. Lee Partners, may sell $275 million of senior notes to back the purchase, it said in a regulatory filing.
Offerings in Pipeline
SRI LANKA plans to sell dollar-denominated bonds by the end of the year, according to its central bank. The South Asian country’s third-ever overseas offering is likely after August, Central Bank of Sri Lanka Assistant Governor C.J.P. Siriwardena said in a telephone interview on June 30.
GEORGIAN RAILWAY LTD. hired Bank of America Corp. and JPMorgan Chase & Co. for a sale of bonds in dollars, according to a banker involved in the transaction.
JORDAN plans to sell about $500 million of bonds, Finance Minister Mohammad Abu Hammour said in an interview on June 23. The sale will be denominated in U.S. dollars “as it’s a stable currency and the Jordanian dinar is pegged to it,” Abu Hammour said.
BANK OF EAST ASIA LTD. hired Citigroup Inc. and JPMorgan Chase & Co. to help it sell subordinated 10-year bonds in dollars, according to a person with direct knowledge of the matter. The banks are meeting potential investors in Hong Kong and Singapore, the person said.
URUGUAY may sell as much as $1 billion of bonds in 2011, including $500 million of dollar-denominated debt, Carlos Steneri, director of public credit at Uruguay’s Ministry of Economy and Finance, said June 3 at a LatinFinance conference in London. The dollar-denominated bonds may have a maturity of 20 years or more, Steneri said.
MALAYSIA plans to raise about $1 billion from its first sale of conventional dollar bonds in eight years after drawing bids for five times the Islamic debt it offered, a finance ministry official said. The government may hire the same banks, including CIMB Group Holdings Bhd. and HSBC Holdings Plc, to arrange the sale by Sept. 30, said the official, who declined to be named as the discussions are private. Malaysia raised $1.25 billion from its first Shariah-compliant dollar bond in eight years on May 27. Malaysia is rated A3 by Moody’s and A- by S&P.
INDOSAT PALAPA CO., a unit of Indonesia’s second-largest phone operator, delayed a planned dollar bond sale until market conditions improve, a person familiar with the matter said May 26. Indosat began meetings with investors in Asia, the U.S. and Europe on May 12 to gauge demand for a global bond sale, according to a company statement sent to the Indonesian stock exchange that day. Moody’s assigned a provisional Ba1 rating to the notes and S&P rated them BB, one step lower.
SABIC CAPITAL, a unit of Saudi Basic Industries Corp., will sell bonds when market conditions and rates are favorable, its vice president for corporate finance Mutlaq al-Morished told al- Arabiya television in Dubai on June 16. Sabic delayed a bond sale because of unfavorable spreads, al-Morished said in a May 26 telephone interview. Sabic Capital had hired HSBC Holdings Plc, JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc to manage a benchmark-sized offering.
GHANA is considering selling its second dollar bond next year to tap investor demand as the start-up of oil production boosts economic growth and narrows the budget deficit, Deputy Finance Minister Fifi Kwetey said. The government is considering a “no-deal roadshow” as early as the fourth quarter to gauge international investors’ appetite, Kwetey said in a May 26 interview in Abidjan. Ghana sold its first global bond in 2007, raising $750 million to help fund the construction of roads and power plants.
ANGOLA received credit ratings from Moody’s, S&P, and Fitch Ratings that put it on par with Nigeria, Lebanon and Belarus, and paved the way for a planned sale of international bonds this year. The southern African nation’s creditworthiness was rated at B+ by S&P and Fitch, four levels below investment grade. Moody’s assigned an equivalent ranking of B1.
EURASIAN NATURAL RESOURCES CORP., a London-based iron ore and alumina producer with operations in China and Russia, said it delayed its first dollar bond sale. The company is “postponing meetings with investors regarding a potential bond issuance under its Euro Medium Term Note program until further notice,” Charlotte Kirkham, a spokeswoman for ENRC, said in an e-mail. The company had hired Deutsche Bank AG and Morgan Stanley to manage the sale, according to a person familiar with the transaction.
KAZAKHSTAN plans to sell between $500 million and $750 million in bonds to investors abroad in the autumn, Kazakh Finance Minister Bolat Zhamishev said in a May 14 interview. The bonds will probably be denominated in dollars and will be used to set a benchmark for corporate borrowing, Zhamishev said.
QATARI DIAR REAL ESTATE INVESTMENT CO. may raise about $1.5 billion by selling global bonds backed by Qatar, according to a person familiar with the sale plan. The developer may offer 10- year conventional bonds and 5-year Islamic securities, said the person who declined to be identified because details of the transaction haven’t been completed. HSBC Holdings Plc and Barclays Capital are among banks expected to manage the sale, according to the person.
CHINA ORIENTAL GROUP CO. plans to sell senior notes to provide working capital and possibly to finance the purchase of steel mills and iron ore assets in China. Deutsche Bank AG will manage the sale with ING Groep NV, according to a statement to the Hong Kong stock exchange.
BANK FOR INVESTMENT & DEVELOPMENT OF VIETNAM received approval from the central bank to issue 7 trillion dong ($369 million) of notes and another 3 trillion dong of dollar- denominated notes in 2010, according to a statement on State Bank of Vietnam’s Web site.
BOLIVIA plans its first international bond sale in more than 70 years as early as the end of 2011, Finance Minister Luis Arce said. He didn’t disclose the size of the offering.
KOREA FINANCE CORP. hired BNP Paribas SA and Standard Chartered Plc to help it sell dollar bonds backed by Korean residential mortgages, according to a person familiar with the transaction. The banks will help arrange meetings with investors in Asia, Europe and the U.S., the person said. Edaily reported in April that the company planned to sell $100 million to $200 million of foreign-currency bonds in its first overseas debt sale since October, without citing anyone. The state-run agency also plans to sell $1 billion of global bonds in the U.S., the Korean-language online newspaper said.
PTT EXPLORATION & PRODUCTION PCL, 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.
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORP. of the Philippines may sell between $750 million and $1.5 billion of dollar-denominated bonds “anytime” to help refinance maturing debt through 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.
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 dollar bonds if markets stabilize, Deputy Finance Minister Dominik Radziwill said. The European Union member earlier planned to sell $1 billion in five-year debt denominated in the U.S. currency as early as April.
MONGOLIA plans to raise $500 million selling bonds this year and the remainder of a planned $1.2 billion program will be sold according to market conditions, Batbayar Balgan, director general of the financial and economic policy department of Mongolia, said at a forum in Ulan Bator on June 16. The government scaled back its plans for global bond sales this year after Europe’s debt crisis drove up borrowing costs. Investment banks are advising Mongolia to issue debt with maturities of 5 to 10 years, Bayartsogt said in a Feb. 9 interview. The securities may yield between 8 percent to 11 percent, he said.