Companies Plan $4.5 Billion of Debt as New Sales Surge: New Issue Alert

Companies are marketing $4.54 of debt after the busiest day for new U.S. dollar issuance this month.

Sales were $5.68 billion yesterday, led by offerings from Time Warner Inc. and Royal Bank of Canada, marking the highest daily volume since June 21, when issuance totaled $10.45 billion, and one of only four days in the past month in which sales were more than $5 billion.

The increased volume comes amid declining corporate default rates, rising levels of cash, and money inflows to the U.S. that are driving a “constructive outlook on credit” according to a report by bond research firm CreditSights Inc.

“Plentiful liquidity over the last 18 months has driven a refinancing boom that has made meaningful inroads to addressing the refinancing challenges of many corporates,” a team of CreditSights Inc. strategists including Louise Purtle in New York and David Watts in London wrote in the report.

Macroeconomic events such as downgraded growth forecasts and the effect of the European sovereign debt crisis are likely to result in a “volatile second-half with a bias to wider spread levels,” according to the report.

The extra yield investors demand to own high-risk, high- yield debt instead of Treasury bonds narrowed 4 basis points to 710 basis points yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. The spread has widened 71 basis points this year.

High-Yield Sale

Postmedia Network Inc., the Canadian international media company, sold $275 million of 8-year notes at a 13 percent yield in the only high-yield transaction to price yesterday.

Speculative-grade bonds are rated below Baa3 by Moody’s Investors Service and BBB by Standard & Poor’s. A basis point is 0.01 percentage point.

Time Warner Inc., the owner of Warner Bros. movie studio and the HBO cable channel, led investment-grade sales yesterday, issuing $3 billion split evenly among 5-year, 10 1/2-year, and 30-year maturities, according to data compiled by Bloomberg.

New York-based Time Warner said in a prospectus filed with the U.S. Securities and Exchange Commission that proceeds will be used to repay debt and for general corporate purposes.

Royal Bank of Canada, the country’s largest bank, sold $1 billion of 5 1/2-year notes at a 90 basis-point spread to U.S. Treasuries.

Credit Suisse Group AG sold $500 million of debt due 2015 in a reopening of a March offering, bringing the total size to $2 billion.

Investment-grade spreads expanded 1 basis point to 208 basis points, according to Bank of America Merrill Lynch’s U.S. Corporate Master index.

Sales this week total $7.78 billion, compared with $7.08 billion in the corresponding period last week, Bloomberg data show.

Following is a description of at least $4.54 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

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 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. Moody’s upgraded Chile’s rating to Aa3 from A1 on June 16, citing “economic and financial resilience even in the face of major adverse shocks, including February’s historic earthquake.”

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.

Not Rated

KUWAIT PROJECTS CO., an investment company with $18.6 billion in consolidated assets, plans to sell 10-year bonds in dollars, according to a banker involved in the transaction. Standard Chartered Plc said in an e-mailed report that the bonds would offer “fair value” at a yield of “around 10 percent.”

BANCO MERCANTIL DO BRASIL SA, a Brazilian bank based in Minas Gerais state, plans to sell dollar bonds in overseas markets, said a person familiar with the offering. The bank may pay a yield of about 9.75 percent on the 10-year notes, said the person, who declined to be identified because terms aren’t set. Bank of America Corp., Banco Santander SA, Espirito Santo SA and Jefferies & Co. are arranging the sale, the person said.

DANFIN FUNDING LTD. may sell as much as $1 billion of three-year pass-through notes backed by Danish financial institutions’ loans, according to a person familiar with the offering. The debt, which will be guaranteed by Denmark, may include fixed- or floating-rate notes, said the person, who declined to be identified because terms aren’t set.

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.

High Yield

FIDELITY NATIONAL INFORMATION SERVICES INC., the provider of banking and payment technology, plans to sell $1.2 billion of senior notes, according to a person familiar with the transaction who declined to be identified because terms aren’t set. The offering may be split between notes that mature in 2017 and debt due in 2020, said the person. Proceeds will be used to buy back stock and repay debt used to buy Metavante Technologies Inc., Jacksonville, Florida-based Fidelity National said in a statement distributed by Business Wire. The company is rated Ba1 by Moody’s and BB by S&P.

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. S&P rated the proposed offering a B+ on June 29.

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 $200 million of six-year loan participation notes at a yield of 11.25 percent, according to two people with knowledge of the sale.

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. Moody’s Investor Services assigned a provisional Ba1 rating.

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. Moody’s Investor Service rated the company’s senior notes B2, citing the refinancing meaningfully improves the company’s liquidity position and provides the company flexibility to reduce debt and manage through a period of attendance-constraining high unemployment notwithstanding the increase in cash interest costs resulting from the refinancing.

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

POTASH CORPORATION OF SASKATCHEWAN INC., the world’s largest fertilizer company by capacity, filed a registration statement with the U.S. Securities and Exchange Commission for $2 billion of debt securities.

INDONESIA plans to name three banks to help it sell approximately $650 million of Islamic bonds in October, Dahlan Siamat, director for Islamic financing at the finance ministry, said in a telephone interview in Jakarta. The government sold its first international Islamic dollar bonds in April 2009.

NOMURA HOLDINGS INC. Japan’s largest brokerage, plans to sell dollar-denominated sukuk, or Islamic bonds, in Malaysia, according to a July 6 company statement. Nomura may sell $100 million of Ijarah sukuk that will mature in 2012. The securities will yield 160 basis points more than the London interbank offered rate, said Jamelah Jamaluddin, chief executive officer of Kuwait Finance House (Malaysia) Bhd., a unit of Kuwait’s biggest Islamic bank, the sale arranger.

OAO GAZPROMBANK, the lending unit of Russia’s gas export monopoly, hired Barclays Capital, Royal Bank of Scotland Group Plc, and UBS AG to organize meetings with investors in Europe and Asia starting July 5, according to two people with knowledge of the transaction.

CORPORACION FINANCIERA DE DESAROLLO S.A. Peru’s state development bank known as Cofide, plans to sell as much as $250 million of dollar-denominated bonds, according to Chief Financial Officer Carlos Linares. Linares said in an interview in Lima, that the lender is selling long-term debt as it boosts lending to local infrastructure projects. “Peru’s need for infrastructure is huge,” Linares said. “The government is trying to promote foreign investment in a long list of projects.”

SRI LANKA plans to sell dollar-denominated bonds, 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 a Shariah-compliant dollar bond 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 in 2011 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. 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.

For Related News and Information: U.S. New issue news: TNI US NEWBON <GO> U.S. corporate finance news: TNI COR US <GO> Top bond news: TOP BON <GO> League tables: LEAG <GO> List of planned bond issues: PREL <GO> New-issue monitor: NIM <GO>

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