Vantage Plans Acquisition Financing as LBO Sales Revive: New Issue Alert

Vantage Drilling Co., the provider of offshore energy drilling services, is marketing debt as acquisition and leveraged buyout financing revives.

Vantage Drilling may sell $960 million of five-year senior secured notes to help pay for the 55 percent of Mandarin Drilling Corp. it doesn’t already own, the Houston-based company said in a statement distributed by Marketwire. Eight high-yield, high-risk transactions financed acquisitions in July and June, up from four in the first two months of 2010, according to data compiled by Bloomberg.

Junk-bond sales reached $7.79 billion for the month, more than double the $3.39 billion for the comparable period in June. Gary Russell, head of high-yield bond portfolio management at Deutsche Bank AG’s DWS Investments, called speculative-grade debt “attractive” amid low Treasury yields, reduced default expectations, and high equity volatility. Junk-bond issuance is shifting toward leveraged buyouts from last year’s refinancing transactions, he said in a press conference yesterday.

Interactive Data Corp., the Pearson Plc unit that provides financial-market data and services, sold $700 million of eight- year notes yesterday, Bloomberg data show.

Proceeds will help fund the company’s buyout by affiliates of Silver Lake Technology Management LLC and Warburg Pincus LLC, according to a person familiar with the transaction, who declined to be identified citing lack of authorization to discuss the offering.

The 10.25 percent notes priced at par to yield 731 basis points more than similar-maturity Treasuries, Bloomberg data show. A basis point is 0.01 percentage point.

Buyout Funding

Earlier this month Fidelity National Information Services Inc., the provider of banking and payment technology, sold $1.1 billion of seven-year and 10-year notes to help finance a stock repurchase and refinance a credit facility used to acquire Metavante Technologies Inc., according to a statement.

Three U.S. high-yield health companies are planning debt sales for acquisition financing. Gentiva Health Services Inc. plans $305 million of eight-year notes for the purchase of Odyssey HealthCare Inc., it said in a May 24 regulatory filing with the U.S. Securities and Exchange Commission.

InVentiv Health Inc. may sell $275 million of senior notes to back the purchase its acquisition by Thomas H. Lee Partners, it said in a regulatory filing.

Universal Health Services Inc. may sell $400 million of senior unsecured debt to help finance the acquisition of Psychiatric Solutions Inc., it said in a filing.

High-Yield Spreads

The extra yield investors demand to own junk bonds widened 2 basis points to 679 basis points, according to the Bank of America Merrill Lynch U.S. High-Yield Master II Index. Absolute yields fell 1 basis point to 8.78 percent, the index data show. High-yield, high-risk bonds are rated below Baa3 by Moody’s Investors Service and BBB by S&P.

The 10-year Treasury note yield closed below 3 percent for a fourth straight day. U.S. equities rose, with the Standard & Poor’s 500 Index climbing 1.1 percent after falling in early trading.

Calpine Corp., the Houston-based U.S. power producer, sold $1.1 billion of senior secured notes due 2020, after boosting the offering from $750 million, according to a person familiar with the sale, who declined to be identified citing lack of authorization to discuss the marketing. The debt yields 505 basis points more than similar-maturity Treasuries, Bloomberg data show.

KfW Bonds

Kreditanstalt fuer Wiederaufbau, the government-owned German bank, sold $1.5 billion of seven-year bonds in the only investment-grade transaction yesterday. The notes yield 49.15 basis points more than Treasuries, Bloomberg data show.

Spreads on investment-grade corporate debt held steady for a fifth straight day at 198 basis points, Bank of America Merrill Lynch index data show. Absolute yields fell to 4.16 percent from 4.18 percent.

Vantage Drilling plans to use some of the funds from its note sale to pay for completion of an ultra-deepwater drilling ship being built for Mandarin Drilling, the person familiar with the sale said.

Companies sold $3.3 billion of debt yesterday, bringing the week’s total to $5.17 billion, down 57 percent from $12.13 billion of issuance in the similar period last week.

Following is a description of at least $6.39 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

EUROPEAN INVESTMENT BANK plans to sell bonds in dollars due September 2013, according to a banker involved in the transaction. The notes may be priced to yield about 17 basis points more than the benchmark mid-swap rate, the banker said. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley are managing the sale, the banker said.

WAHA AEROSPACE BV plans to sell 10-year amortizing notes bonds in dollars, according to a banker involved in the transaction. The debt, which has an average life of 5 1/4 years, may yield 225 to 230 basis points more than U.S. Treasuries, the banker said. The notes are guaranteed by the Emirate of Abu Dhabi, the banker said.

CAISSE D’AMORTISSEMENT DE LA DETTE SOCIALE, the state agency charged with funding France’s social security debt, plans to sell three-year bonds in dollars that may be priced to yield 28 basis points more than the benchmark mid-swap rate, according to a banker involved in the transaction. JPMorgan Chase & Co., RBC Capital Markets and UBS AG are managing the sale, the banker said.

CHICAGO PARKING METERS LLC may sell $500 million of 10-year notes, according to a person familiar with the transaction. Proceeds from the sale will be used to fund a cash distribution to its owners, which include Morgan Stanley, Allianz AG and the Abu Dhabi Investment Authority, said the person, who declined to be identified because terms aren’t set. The issue was rated Baa3 by Moody’s and BBB- by S&P, according to separate statements by the rating companies.

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. Standard & Poor’s assigned a preliminary rating of BBB+ to the sukuk.

NASPERS LTD. hired Citigroup Inc., Barclays Capital and JPMorgan Chase & Co. for a sale of seven-year bonds in dollars, according to two people with knowledge of the transaction. The company plans to meet with European, U.S. and Asian investors, the people said. Moody’s Investors Service assigned a Baa3 rating to the proposed notes, which will be issued through the Myriad International Holdings BV unit. Proceeds will be used to repay debt and for general corporate purposes, according to Moody’s.

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

VANTAGE DRILLING CO. may sell $960 million of five-year debt to help pay for its acquisition of Mandarin Drilling Co. and to finance the completion of a ultra-deepwater drilling ship, according to a person familiar with 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 plans to issue seven-year debt to repay existing indebtedness, Sensient said in a March 1 regulatory filing.

High Yield

JBS SA, the world’s biggest beef producer, plans to sell benchmark dollar bonds due in 2018, according to a person familiar with the offering. Banco Santander SA and JPMorgan Chase & Co. are arranging the offering, said the person, who declined to be identified because terms aren’t set. Standard & Poor’s assigned the proposed notes a BB rating. A benchmark issue is typically at least $500 million.

AIR CANADA, the country’s largest airline, plans to sell $900 million of senior secured notes due 2015 to be issued in U.S. dollars and Canadian dollars, the company announced in a statement distributed through CNW Telbec. Air Canada intends to use some of the proceeds to repay debt under its July 2009 credit agreement, according to the statement. Moody’s Investors Service assigned a B2 rating to the proposed notes.

ENTRAVISION COMMUNICATIONS CORP., a media company that targets Spanish-speaking customers, said it intends to offer $385 million aggregate principal amount of senior secured first lien notes due 2017 and enter into a new revolving credit facility of up to $50 million. Moody’s assigned the notes a grade of B1.

ACCURIDE CORP., the Evansville, Indiana-based maker of wheels for trucks and trailers, said it may sell $300 million of first-priority, senior-secured notes due 2018. Proceeds from the offering will help refinance the company’s existing senior credit facility, Accuride said in a statement.

E-LAND FASHION CHINA HOLDINGS LTD, the Hong Kong-based apparel products provider, hired Morgan Stanley to help it sell $200 million of three-year bonds, according to a person familiar with the matter. The company plans to begin meeting with investors in Asia, Europe and the U.S. on July 19, said the person who declined to be identified because terms aren’t set. Moody’s Investors Service assigned the proposed notes a Ba2, citing growing personal consumption in China, E-Land Fashion’s moderate scale and significant business volatility. Proceeds will be used for mainly for capital expenditures and general corporate purposes, Moody’s said in the report.

ENERGYSOLUTIONS INC., the Salt Lake City-based nuclear services company, has amended its credit facility and plans to refinance that debt with borrowings under new loans and an offering of senior notes, the company said July 13 in a statement distributed by Marketwire. Standard & Poor’s assigned the proposed $300 million senior unsecured notes due 2018 a BB- on July 15.

CALUMET SPECIALTY PRODUCTS PARTNERS LP, the Indianapolis- based refiner of specialty hydrocarbon products, plans to sell $450 million of senior notes. Proceeds will be used to repay bank debt, the company said in a July 12 statement distributed by Business Wire. Calumet Specialty plans to market the 10-year notes beginning through July 16, according to a person familiar with the transaction. Standard & Poor’s assigned the notes a B rating.

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.

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. Standard & Poor’s assigned a B- rating to the proposed notes due 2018. Moody’s Investors Service assigned them a Caa1.

Offerings in Pipeline

CZECH REPUBLIC plans to sell as much as $2 billion of dollar bonds to diversify from koruna and euro debt, Eduard Janota, whose term as finance minister ended this week, said in an interview for Mlada Fronta Dnes newspaper.

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.

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 SA 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. plans to sell five-year bonds in dollars that may be priced to yield about 10 percent, according to two people with knowledge of the sale. The company hired Bank of America Corp.’s Merrill Lynch unit and JPMorgan Chase & Co. to manage 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.

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.

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.

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.

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 8 percent to 11 percent, he said.

To contact the reporters on this story: Katie Evans in New York at kevans28@bloomberg.net.

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