Sabra Health Care Plans Bonds as Yankees Dominate Sales: New Issue Alert

Sun Healthcare Group Inc., the company spinning off Sabra Health Care REIT Inc., is marketing debt as non-U.S. borrowers dominate investment-grade sales in dollars this month.

Units of Sabra Health Care plan to issue $225 million of senior notes due 2018, Sun Healthcare said in an Oct. 15 statement distributed by Marketwire. Sun Healthcare, based in Irvine, California, will guarantee the debt until it is separated from Sabra Health Care, according to the statement.

So-called Yankee borrowers account for 63 percent of investment-grade sales in U.S. dollars this month, the highest monthly proportion since April, when foreign offerings were 68 percent, according to data compiled by Bloomberg. U.S. borrowers are waiting for third-quarter earnings reports to end before issuing, said Rajeev Sharma, a money manager at First Investors Management.

“Generally, U.S. issuance picks up steam after earnings are reported,” said Sharma, who helps oversee $1.4 billion in investment-grade debt in New York. “With rates where they are, we will see a big new issue calendar for U.S. names.”

The extra yield investors demand to own investment-grade debt instead of Treasuries rose 1 basis point to 182 basis points on Oct. 15, and increased similarly for the week, according to Bank of America Merrill Lynch’s U.S. Corporate Master index. Yields increased 4.3 basis points for the day to 3.68 percent after ending at 3.56 percent on Oct. 8, the lowest since the daily measure was made available in October 1986.

Foreign Borrowers

Foreign borrowers have issued $18.2 billion of U.S. dollar- denominated debt this month, as domestic companies have sold $11.66 billion, Bloomberg data show.

Colonial Pipeline Co., which operates the largest pipeline linking U.S. Gulf Coast refiners to East Coast markets, and Air Medical Group Holdings Inc. led $1.66 billion of corporate bond sales on Oct. 15, Bloomberg data show. Weekly issuance was $22.7 billion, the data show.

Proceeds from Sun Healthcare’s issue may be used to repurchase outstanding 9.125 percent senior subordinated notes due 2015, the company said in the statement. The provider of nursing and health-care services to senior citizens is spinning Sabra Health Care off into a separate publicly traded company.

The company plans to market the debt between Oct. 18 and Oct. 22, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.

Spreads on speculative-grade debt narrowed 2 basis points to 595 basis points, tightening 17 basis points for the week, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Absolute yields were 7.768 percent, near their 7.765 percent on Oct. 14, the lowest since June 6, 2007.

The following is a description of at least $4.64 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

LLOYDS TSB BANK PLC plans to sell $3 billion of U.K. mortgage-backed securities in dollars, pounds, yen and euros, according to two people with knowledge of the sale. The U.K.’s largest mortgage lender marketed $700 million of 1A1 Notes at 140 basis points over the London interbank offered rate, said the people, who declined to be identified before the deal is completed. Lloyds will also sell 20.08 billion yen ($246 million) of 1A2 notes and 225 million pounds ($361 million) of 1A3 notes, the people said. An 800 million-euro ($1.1 billion) portion of 2A notes and 400 million pounds of fixed-rate 4A notes will also be included. The debt will be issued through Arkle 2010-2.

TRANSNET LTD., South Africa’s state-owned ports, rail and pipeline operator, said it may sell $1 billion worth of bonds in international markets to pay for expansion. Transnet has 35.2 billion rand ($5 billion) of debt outstanding.

ISLAMIC DEVELOPMENT BANK plans to sell sukuk in dollars, according to two people with knowledge of the sale. CIMB Holdings Bhd., Citigroup Inc., HSBC Holdings Plc and Standard Chartered Plc are managing the issue, the people said.

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.

KOREA GAS CORP., the world’s biggest buyer of liquefied natural gas, plans to raise as much as $1 billion from dollar- denominated bonds to fund overseas investments, according to a person with knowledge of the matter. The Seongnam-based company hired five banks to help it sell notes, the person said, declining to name the banks and asking not to be identified because the information is confidential. Deutsche Bank AG, Goldman Sachs Group Inc. and UBS AG arranged the meetings, the person said.

Not Rated

BANCO DE ORO UNIBANK INC., the Philippines’ biggest bank by assets, plans to sell $300 million of notes due April 2016, according to two people with knowledge of the sale. The notes may yield 3.95 percent to 4 percent, said the people, who declined to be identified because terms aren’t set. Citigroup Inc. and UBS AG are managing the sale.

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.

AVANGARDCO INVESTMENTS PUBLIC LTD., Ukraine’s biggest egg producer, plans to sell $250 million to $350 million of five- year bonds that may yield less than 9 percent, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.

High Yield

ACCELLENT INC., the medical device manufacturer owned by private-equity firm KKR & Co., plans to sell $315 million of senior subordinated notes due in 2017, the company said in an Oct. 14 statement distributed by Business Wire. Proceeds may be used to finance a tender offer for Accellent’s 10.5 percent senior subordinated notes due in 2013, according to the statement.

SUN HEALTHCARE INC., a provider of nursing and health-care services to senior citizens, plans to sell $225 million of notes due 2018 through Sabra Health Care REIT Inc., the company said in a statement distributed by Marketwire. Sun Healthcare will guarantee the senior notes until it completes its separation of Sabra Health Care into a publicly traded company, according to the statement. Proceeds may be used to repurchase Sun Healthcare’s outstanding 9.125 percent senior subordinated debt due 2015, the company said.

OMNOVA SOLUTIONS INC., the maker of specialty chemicals used in paper and carpets, plans to sell $250 million of senior notes to help fund its purchase of Eliokem International SAS and to repay or replace bank debt, the Fairlawn, Ohio-based company said in a statement. A new $200 million term loan will also help pay for the acquisition, the company said. Omnova has no outstanding bonds, said company spokeswoman Sandi Noah.

FRIENDFINDER NETWORKS INC., the publisher of Penthouse magazine, plans to sell $296 million of secured first-lien notes due 2013, according to a note from Standard & Poor’s. S&P rated the debt from the private Boca Raton, Florida-based company B.

ABENGOA SA, the Seville, Spain-based engineering and biofuel production company, plans to sell $600 million of seven- year senior bonds, according to a person familiar with the transaction. Bank of America Corp., Citigroup Inc., Credit Suisse Group AG and Deutsche Bank AG are managing the issue, according to the person, who declined to be identified because terms weren’t set.

Offerings in Pipeline

BELARUS may sell debt in the U.S. and Asia, according to Finance Minister Andrei Kharkovets. “We will undoubtedly enter the Asian and the American markets,” Kharkovets said in an Oct. 15 interview in Moscow, declining to comment on the timing of possible sales.

POSCO, the world’s third-largest steelmaker by production, hired five banks to manage a sale of bonds denominated in U.S. dollars, according to a person familiar with the matter. BNP Paribas, Bank of America Corp., Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley are underwriting the benchmark offering, said the person, who asked not to be identified because the details are private.

GEORGIAN RAILWAY LLC, the former Soviet republic’s state- owned rail company, is preparing a bond roadshow in the U.S., Giorgi Gagnidze, the company’s financial director, said in comments broadcast on Rustavi-2 television.

CENTRAL CHINA REAL ESTATE LTD., part-owned by Singapore’s CapitaLand Ltd., plans to sell bonds denominated in U.S. dollars to fund property projects, according to a statement to the Hong Kong stock exchange. Deutsche Bank AG, Nomura Holdings Inc. and ING Groep NV will manage the sale and help arrange meetings with investors, according to the statement.

ICICI BANK LTD., India’s second-largest lender, hired Barclays Capital, Citigroup Inc. and Deutsche Bank AG to sell as much as $1 billion of bonds with maturities between five and 10 years, according to three people familiar with the offering. India’s second-biggest lender is rated Ba1 by Moody’s Investors Service and BBB- by S&P.

IRVING PLACE CAPITAL may issue $250 million of senior secured notes to help pay for its leveraged buyout of Thermadyne Holdings Corp. and refinance the company’s debt, Thermadyne Chief Financial Officer Steven Schumm said in an Oct. 5 interview. The company will also arrange a $60 million asset- based revolving credit line. Jefferies Group Inc. and Royal Bank of Canada will manage the sale of six-year bonds, Schumm said.

KOREA NATIONAL OIL CORP. hired Barclays Plc, BNP Paribas SA, Credit Suisse Group AG, Deutsche Bank AG and Korea Development Bank for a sale of dollar bonds, a person familiar with the deal said on Oct. 6. The company known as KNOC said in September it plans to raise between $500 million and $1 billion to fund acquisitions. KNOC is rated A1 by Moody’s Investors Service and A by Standard & Poor’s.

AL BARAKA BANK EGYPT ESC, a unit of Bahrain-based Albaraka Banking Group, may sell dollar-denominated Islamic bonds in the second half of 2011, the bank’s chairman said Sept. 29. The bank has not decided on the size of the bond, he said.

AMERICAN INTERNATIONAL GROUP INC. is planning its first debt offering since its bailout two years ago as the insurer moves toward independence from the U.S. government, Chairman Steve Miller said Sept. 29.

TURKIYE IS BANKASI AS, a Turkish bank, applied to Turkey’s capital markets regulator to sell dollar-denominated bonds abroad, according to a filing with the Istanbul Stock Exchange.

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

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.

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.

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: Sapna Maheshwari at

To contact the editor responsible for this story: Alan Goldstein at

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