FTI Consulting Plans Debt as Junk Yields Plumb 4-Month Low: New Bond Alert

FTI Consulting Inc., the West Palm Beach, Florida-based provider of forensic accounting services, is marketing debt as yields on speculative-grade company bonds have fallen to the lowest in more than four months.

FTI Consulting plans to sell $350 million of 10-year notes, it said in a statement distributed by PR Newswire. The company will use the proceeds to repay debt, according to the statement.

Sales of high-yield, high-risk corporate bonds are accelerating as investors wager that companies won’t default on their debt amid signs the economy will avoid recession. The extra yield investors demand to own the debt is the lowest since May, according to Bank of America Merrill Lynch index data.

“There’s a lot of money in the fixed-income market chasing only so many deals,” said Mirko Mikelic, a money manager at Fifth Third Asset Management in Grand Rapids, Michigan. “Whether it’s the investment-grade space or the high-yield space, demand is crazy right now.”

Yields on junk-rated corporate debt fell 6 basis points to 8.25 percent, the lowest since April 27, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Spreads on the debt were unchanged at 636 basis points, the data show.

High-yield, or junk, debt is rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s. A basis point is 0.01 percentage point.

FTI Ratings

FTI Consulting’s notes were graded Ba2 by Moody’s, the credit rater said in a statement. S&P assigned the company a rank of BB+, one step higher.

Ford Motor Credit Corp., the finance arm of the second- biggest U.S. carmaker, sold $1 billion of five-year notes and Huntsman Corp. issued $350 million of debt maturing in 2021 yesterday, Bloomberg data show. That brought junk-bond issuance this week to $3.76 billion, compared with $1 billion during the similar period last week, Bloomberg data show.

Investment-grade corporate bond spreads shrank 1 basis point to 184 basis points while yields on the debt fell 7 basis points to 3.82 percent, according to the Bank of America Merrill Lynch U.S. Corporate Master Index.

Rabobank Nederland NV sold $350 million of 100-year bonds in the first such sale by a financial institution, and American Honda Finance Corp. issued $1.75 billion of debt in a three-part offering to lead $8.15 billion of investment-grade issuance yesterday.

The following is a description of at least $14.2 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

BLACKSTONE GROUP LP, the world’s largest buyout firm, plans to sell $400 million of 10.5-year notes, according to a person familiar with the transaction. Proceeds will be used for general corporate purposes, said the person, who declined to be identified because terms aren’t set.

DOHA BANK QSC, Qatar’s third-largest bank, may raise as much as $1 billion from bond sales, its chief executive officer said. The debt is likely to be 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 in dollars and the local riyal currency, the CEO said in a July 25 interview.

Not Rated

ABITIBIBOWATER INC., the largest newsprint maker in North America, plans to sell $750 million of senior secured notes due 2018, the company said in a statement distributed by PR Newswire. The offering is part of the Montreal-based company’s previously announced reorganization plan and emergence from creditor protection in the U.S. and Canada, according to the statement.

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

High Yield

FTI CONSULTING INC. said it plans to offer $350 million aggregate principal amount of senior notes due 2020 in a private offering in a statement distributed by PR Newswire.

PHI INC., an aviation company serving the oil and gas exploration industry, plans to sell $300 million of senior notes due in 2018, the company said in a statement distributed by Business Wire. Proceeds will be used to repay debt and for general corporate purposes, including the purchase of aircraft currently being leased, PHI said.

BEVERAGES & MORE INC. plans to sell $125 million of four- year senior secured debt, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.

ALERE INC., a provider of patient diagnosis, monitoring and health management services, plans to sell $350 million of eight- year notes, according to a person familiar with the transaction. Proceeds may be used for working capital and general corporate purposes, said the person, who declined to be identified because terms aren’t set. Alere may sell the debt as soon as Sept. 16, the person said.

BRIGHAM EXPLORATION CO. plans to sell $250 million of senior notes due 2018, the company said in a Sept. 13 statement distributed by Marketwire. Proceeds may be used to purchase up to $150 million of outstanding notes due 2014 as part of a tender offer and to fund part of the company’s 2011 capital budget, according to the statement.

GENON ENERGY, the power producer being formed by the merger of Mirant Corp. and RRI Energy Inc., plans to sell $1.4 billion of notes to help pay for the transaction, according to a person familiar with the offering. The company plans to issue eight- and 10-year notes, said the person, who declined to be identified because terms aren’t set. Moody’s assigned the notes a rank of B3 and S&P graded them B, one step higher.

PINAFORE LLC and PINAFORE INC., entities created by Onex Corp. and Canada Pension Plan Investment Board, plan to sell $1.6 billion of senior secured notes in a two-part offering to fund the acquisition of Tomkins Plc. They will offer $600 million of senior secured first-lien notes due 2017 and $1 billion of senior secured second-lien notes due 2018, according to a statement distributed by PR Newswire.

VALEANT PHARMACEUTICALS INTERNATIONAL, the U.S. company merging with Biovail Corp., Canada’s largest publicly traded drugmaker, plans to offer about $1 billion of senior unsecured notes, it said in a statement. Aliso Viejo, California-based Valeant is also seeking $1.875 billion of loans to finance the transaction and pay a dividend, according to a person familiar with the situation.

PROQUEST LLC may sell $250 million of eight-year unsecured notes, according to a person familiar with the transaction. Proceeds may be used to repay debt, pay a dividend to the company’s parent and for general corporate purposes, said the person, who declined to be identified because terms aren’t set.

DINEEQUITY INC., the owner of Applebee’s Neighborhood Grill & Bar and the IHOP pancake chain, plans to sell senior unsecured notes, the company said in a statement distributed by Marketwire. Proceeds may be used to help fund tender offers for “certain series of its subsidiaries’ outstanding securitization notes,” the Glendale, California-based company said in the statement.

REYNOLDS GROUP HOLDINGS LTD., the maker of Reynolds Wrap aluminum foil, may sell $2 billion of senior secured notes and $1.5 billion of senior unsecured notes to help pay for its purchase of Pactiv Corp., according to a person familiar with the transaction who declined to be identified because terms aren’t set. Reynolds Group is also seeking $1.5 billion in loans to pay for the acquisition, the person said.

CELANESE CORP., the largest producer of acetyl chemicals used in paint and plastics, plans to sell $400 million of senior unsecured notes due in 2018, it said in a statement distributed by Business Wire. The Dallas-based company plans to use proceeds to retire existing bank debt, according to the statement. S&P ranked the notes BB-.

VISANT HOLDING CORP., the U.S. marketing and publishing firm owned by KKR & Co., plans to sell $750 million of notes due in 2017 through its Visant Corp. unit, according to a statement distributed by PR Newswire. Visant is also seeking a $1.25 billion term loan and a $175 million revolving line of credit, the Armonk, New York-based company said in the statement. Proceeds from the borrowings may be used to repay debt and pay a dividend to investors in Visant’s stock and options.

TITAN INTERNATIONAL INC., the maker of tires and wheels for off-highway vehicles, plans to sell bonds and will use the proceeds to repay debt, Chief Financial Officer Paul Reitz said in a telephone interview. The Quincy, Illinois-based company plans to buy back up to $139.9 million of notes maturing in 2012, it said in a statement distributed by Business Wire. The company withdrew a proposed $150 million offering announced in May because of adverse market conditions, Reitz said.

NBTY INC., the maker of Nature’s Bounty and MET-Rx nutritional supplements, may issue $900 million of bonds in addition to seeking a $1.5 billion term loan and a $200 million revolving line of credit to help pay for its acquisition by Carlyle Group, according to a person familiar with the transaction who declined to be identified because terms aren’t set. S&P assigned the notes, or borrowings under a bridge credit facility in their place, a rank of B.

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. Moody’s Investors Service ranked the proposed notes at Ba2, citing growing personal consumption in China, E- Land Fashion’s moderate scale and significant business volatility. Proceeds will be used mainly for capital expenditures and general corporate purposes, Moody’s said in the report.

Offerings in Pipeline

AEGIS LTD., an outsourcing unit of Essar Group, may sell the first non-convertible dollar bonds from an Indian information technology company. The company, which bought PeopleSupport Inc. in 2008, may sell its bonds as part of a financing package that would include a loan of as much as $350 million to consolidate debt, Chief Financial Officer C.M. Sharma said. The money would go to fund expansion

AMERICAN INTERNATIONAL GROUP INC., the insurer that’s majority owned by the U.S., may sell bonds to help repay its government bailout, it said in an Aug. 9 registration statement filed with the Securities and Exchange Commission.

GATX CORP., a Chicago-based company that leases railroad cars and other equipment, filed a shelf registration with the Securities and Exchange Commission to sell debt securities and pass-through certificates. The debt securities may be senior or subordinated, according to the filing.

JSW STEEL LTD, India’s third-largest steelmaker, plans to sell dollar bonds for the first time in three years and as rupee-denominated finance costs rise. JSW has applied for credit ratings before a possible offshore bond sale to help build a 200 billion rupee ($4.3 billion) steel and power plant in West Bengal, Chief Financial Officer Seshagiri Rao said.

ARGENTINA may sell $1 billion of bonds due in 2017, El Cronista newspaper reported, without saying how it obtained the information. The government is also planning to offer an exchange for dollar bonds due in 2011 and 2012, the Buenos Aires-based publication said.

RURAL ELECTRIFICATION CORP., India’s state-owned lender to power projects, may sell as much as $300 million of bonds in U.S. dollars, Finance Director Hari Das Khunteta said in a telephone interview. Rural Electrification plans to raise $500 million from debt sales in the year ending March 31, he had said on April 16.

UKRAINE may sell bonds in the international capital markets, according to Dragon Capital, the former Soviet republic’s biggest brokerage. The government may sell $1.5 billion to $2 billion of 10-year, dollar-denominated debt with a yield of 7 percent to 7.5 percent after getting approval for a new International Monetary Fund loan and having its credit rating raised by Standard & Poor’s, said Olena Bilan, Dragon’s chief economist, at a press briefing in Kiev on July 30.

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 about $650 million of Islamic bonds, 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.

SRI LANKA hired HSBC, Bank of America Merrill Lynch and Royal Bank of Scotland to sell $1 billion of bonds, the Central Bank of Sri Lanka said on its website on Aug. 12.

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 Latin Finance 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 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.

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 was considering a “no-deal roadshow” 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.

MONGOLIA plans to raise $500 million selling bonds in 2010 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 years to 10 years, Finance Minister Sangajav 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: Timothy Catts in New York at tcatts1@bloomberg.net.

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