Ferro Plans Debt as Profits Renew Investors' Risk Appetite: New Bond Alert

Ferro Corp., the Cleveland-based maker of porcelain enamel for cookware and appliances, is marketing debt as investors gain confidence company profits will continue to grow.

Ferro plans to sell $250 million of notes and use proceeds to redeem its convertible debt due in 2013, it said in a statement distributed by Business Wire.

Sales of corporate debt are accelerating as 82 percent of companies in the Standard & Poor’s 500 Index beat analysts’ earnings estimates, according to data compiled by Bloomberg. Investors are regaining their appetite for riskier securities as they wager that Europe’s sovereign debt crisis is contained and the financial regulatory overhaul won’t derail the economic recovery, said Eric Peiffer, managing director at KeyBanc Capital Markets.

“For a while, the headlines had the most impact on the market, macroeconomics the second-most and fundamentals came third, even though they were very good,” said Peiffer, who is based in Cleveland. “The order of things has totally reversed itself over the past two or three weeks.”

The extra yield investors demand to own high-yield, high- risk debt fell 11 basis points to 643 basis points, the least since May 17, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Yields on the debt fell 5 basis points to 8.54 percent, the index data show.

High-yield, high-risk bonds are rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s. A basis point is 0.01 percentage point.

Spreads Fall

Spreads on investment-grade corporate debt fell 4 basis points to 187 basis points while yields rose 1 basis point to 4.15 percent, Bank of American Merrill Lynch index data show.

Ferro’s debt sale comes after Advanced Micro Devices Inc., the second-largest maker of microprocessors, sold $500 million of senior notes due in 2020 on July 26, also to help fund a tender offer for convertible senior notes, Bloomberg data show.

AT&T Inc. sold $2.25 billion of five-year notes and Canadian Imperial Bank of Commerce issued $1 billion of covered bonds as it reopened two earlier offerings, leading $3.75 billion of investment-grade sales yesterday, Bloomberg data show.

Air Canada sold $1.09 billion of debt denominated in U.S. and Canadian dollars in yesterday’s biggest high-yield sale.

Corporate bond sales of $12.3 billion through yesterday compare with $3.69 billion through the first two days of last week, Bloomberg data show. It was the fastest start to a week since the period ended June 22, the data show.

Following is a description of at least $5.68 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

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 will sell the bonds by the end of this year in both dollars and the local riyal currency, the CEO said in a July 25 interview. 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.

CHILE hired JPMorgan Chase & Co, Citigroup Inc. and HSBC Holdings Plc to arrange the country’s first international bond sale in six years, Finance Minister Felipe Larrain said. Chile will use proceeds of the 10-year bonds to help finance rebuilding after a February earthquake, Larrain said. The government plans to sell $1 billion of the securities in dollars and $500 million “denominated in pesos,” Larrain said. Moody’s upgraded Chile 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.” S&P graded the proposed notes A+.

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

STERICYCLE INC. plans to issue $175 million of 7-year, 3.89 percent notes and $225 million of 10-year, 4.47 percent debt after receiving commitments from 22 institutional investors to buy the securities, it said in a statement distributed by Business Wire.

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. The province hired Citigroup Inc. and UBS AG to arrange an overseas dollar bond sale, said a person familiar with the transaction who declined to be identified because terms aren’t set.

High Yield

BANCO PANAMERICANO SA, the lender controlled by media magnate Silvio Santos, plans to sell $300 million of five-year dollar bonds, according to a person familiar with the transaction. The Sao Paulo-based bank hired Banco Bradesco SA, Itau Unibanco Holding SA, Standard Bank Group Ltd. and UBS AG to arrange the sale of senior unsecured notes, said the person, who declined to be identified because terms aren’t set. Moody’s rates the notes Ba2, it said in a report.

MULTIPLAN INC. may sell $650 million to $675 million of bonds to help pay for its acquisition by BC Partners Ltd. and Silver Lake, according to a person familiar with the transaction. The health-care cost management company also seeks a $1.3 billion term loan and a $75 million revolving line of credit, said the person, who declined to be identified because terms aren’t set.

FERRO CORP. plans to sell $250 million of senior notes as it seeks to repurchase outstanding convertible debt due in 2013. The company also is negotiating with lenders to enter into a new credit facility, according to a statement distributed by Business Wire.

KCA DEUTAG DRILLING GROUP LTD., a unit of private-equity investor First Reserve Corp., is planning to sell $500 million of eight-year bonds through Turbo Beta Plc, according to Alex Christou, an Aberdeen, Scotland-based spokesman for the oil- services company. Goldman Sachs Group Inc. is managing the sale with HSBC Holdings Plc, Lloyds TSB Banking Group Plc, Royal Bank of Scotland Group Plc and Natixis, a person with knowledge of the transaction said. The notes may be rated CCC by S&P and Caa2 by Moody’s, according to a statement on the company’s website.

MARINA DISTRICT FINANCE COMPANY INC., owner of the Borgata Hotel Casino & Spa in Atlantic City, plans to sell $725 million of senior secured debt in two parts, according to a person familiar with the transaction. The notes will be due in 2015 and 2018, said the person, who declined to be identified because terms aren’t set. Marina District Finance is Boyd Gaming Corp.’s joint venture with MGM Resorts International. Proceeds will be used to repay bank debt and fund a dividend, the person said.

TRILOGY INTERNATIONAL PARTNERS LLC, the wireless communications provider, plans to sell $370 million of senior secured notes, according to Moody’s Investors Service. Moody’s rated the notes Caa1, it said in a report. Proceeds will be used to refinance debt and finance growth in New Zealand, Moody’s said. S&P rated the debt an equivalent CCC+. The notes will have a maturity of six years, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.

UNIVERSAL HEALTH SERVICES INC., the operator of more than 100 U.S. medical facilities that’s buying Psychiatric Solutions Inc., cut its offering of senior unsecured notes to $250 million, according to a person familiar with the transaction. It increased the size of the term loans it’s seeking by $100 million, said the person, who declined to be identified because terms aren’t set. The King of Prussia, Pennsylvania-based company previously planned to issue $400 million of senior unsecured debt to help finance the acquisition, according to a filing with the Securities and Exchange Commission.

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.

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.

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

NATIONAL BANK OF EGYPT, the country’s largest lender, plans to sell its first international bonds and is meeting with fixed- income investors, according to three people familiar with the plan. The Cairo-based bank may offer a benchmark-sized issue, said a banker, who declined to be identified because terms aren’t set. The lender received approval from Egypt’s central bank to sell as much as $1.5 billion of bonds and is meeting with investors in Asia, London, Germany, the Middle East, and Eastern Europe, said a bank official, who declined to be identified. Benchmark issues are typically for at least $500 million.

BANCO BMG S.A., a Brazilian lender specializing in loans to state retirees and workers, plans to sell 10-year bonds in dollars, according to a person familiar with the offering. The Belo Horizonte-based bank hired Banco Bradesco SA, BCP Securities, Morgan Stanley and Banco Santander SA to arrange the sale, said the person, who declined to be identified because terms aren’t set.

IDBI BANK LTD., an Indian state-owned lender, is considering a sale of bonds denominated in U.S. dollars to raise about $500 million, Executive Director Melwyn Rego said in an interview on July 21. HSBC Holdings Plc and Barclays Plc have been hired to oversee the bank’s medium-term note program, Rego said. BNP Paribas SA, Royal Bank of Scotland Group Plc and Standard Chartered Plc will help manage this sale of benchmark notes, to be done through its Dubai branch, he said. The bonds may have a maturity of five to five-and-a-half years, said Rego.

CZECH REPUBLIC plans to sell as much as $2 billion of dollar bonds to diversify from koruna and euro debt, Eduard Janota, former finance minister, 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.

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.

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, 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. 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 to fund mining and energy projects, according to Deputy Chief Executive Officer Nguyen Van Hai.

FINLAND may sell five-year bonds denominated in dollars, 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 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 reporter on this story: Tim Catts in New York at tcatts1@bloomberg.net.

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