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United Rentals Plans Debt as Company Bond Sales Jump 87%: New Issue Alert

United Rentals Inc., the equipment- leasing company with more than 550 locations, is marketing debt as corporate bond sales jump 87 percent from the similar period last week amid better-than-expected third-quarter earnings.

United Rentals may sell $750 million of 10-year notes as soon as today at a yield of 8.25 percent to 8.5 percent, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. It boosted its offer from $500 million, the person said.

CSX Corp. and UnitedHealth Group Inc. are among companies that have offered $21 billion of debt this week, compared with $11.25 billion in the similar period last week, according to data compiled by Bloomberg. Sales are jumping as per-share earnings have topped estimates at 67 of the 79 companies in the Standard & Poor’s 500 Index that have reported results since Oct. 7, Bloomberg data show.

“As we’re getting to the end of the earnings season reporting time, we’re going to see more names come to market,” said Rajeev Sharma, a money manager at First Investors Management who helps oversee $1.4 billion of investment-grade debt in New York. “With rates where they are, it’s a good time for these guys to come in.”

The extra yield investors demand to own investment-grade bonds instead of Treasuries rose 1 basis points to 183 basis points yesterday, according to the Bank of America Merrill Lynch U.S. Corporate Master Index. Absolute yields on the debt were unchanged at 3.6 percent, the index data show.

UnitedHealth Notes

UnitedHealth, the biggest U.S. health insurer by revenue, helped lead $2.47 billion of debt sales yesterday, Bloomberg data show. Investment-grade companies accounted for $1.95 billion of sales, and high-yield, high-risk companies issued $515 million, the data show.

Spreads on speculative-grade corporate bonds widened 2 basis points to 606 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Yields rose 1 basis point to 7.78 percent.

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.

United Rentals will use proceeds from its offering to repurchase 7.75 percent senior subordinated notes maturing in 2013, including payment for a call premium, and to reduce borrowings under a credit line, according to a statement distributed by Business Wire yesterday. The Greenwich, Connecticut-based company will issue the debt through United Rentals North America Inc., it said in the statement.

The company last issued bonds in November 2009, according to data compiled by Bloomberg.

The 10-year notes will be callable after five years, said the person familiar with the offering.

The following is a description of at least $7.3 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

POSCO, the world’s third-largest steelmaker by production, plans to sell as much as $700 million of 10-year fixed-rate senior unsecured notes denominated in U.S. dollars, according to a person familiar with the transaction. The debt may yield 190 basis points to 200 basis points more than similar-maturity U.S. Treasuries, said the person, who declined to be identified because the matter is private.

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.

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

BWAY PARENT CO. may sell $125 million of five-year notes that may pay interest in cash or additional debt, according to a person familiar with the offering who declined to be identified because terms aren’t set. The company, a unit of Madison Dearborn Partners LLC, owns Bway Holding Co., the maker of cans and containers owned by Madison Dearborn Partners LLC.

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

UNITED RENTALS INC., the equipment rental company with more than 550 locations, plans to sell $750 million of notes due 2020, according to a person familiar with the transaction. Proceeds from the senior subordinated notes, which will be issued through United Rentals North America Inc., may be used to buy back 7.75 percent senior subordinated debt maturing in 2013 and to reduce borrowings under a credit line, the company said in a statement distributed by Business Wire. The 10-year notes will be noncallable for five years, said the person, who declined to be identified because terms aren’t set.

FORTESCUE METALS GROUP LTD., Australia’s third-biggest producer of iron ore, plans to sell $2.04 billion of U.S. dollar-denominated bonds to repay outstanding debt, according to a statement to the Australian stock exchange. The senior unsecured notes will be rated BB+ and will mature in October 2015, Fitch Ratings said in a separate statement.

(Added Oct. 19. See FMG AU .)

AMERICAN ACHIEVEMENT CORP., the maker of class rings and yearbooks for the educational institution market, plans to sell $365 million of senior secured notes due 2016. The debt will be guaranteed on a second-priority senior secured basis by parent company AAC Holding Corp., the company said in an Oct. 18 statement distributed by Business Wire.

(Added Oct. 19. See 75407Z US .)

RURAL/METRO CORP., the provider of medical transportation and fire protection, plans to sell $200 million of senior notes due 2018 through a private offering, the company said in an Oct. 18 statement distributed by Marketwire.

{Added Oct. 19. See RURL US .)

HIDILI INDUSTRY INTERNATIONAL DEVELOPMENT LTD., the Chinese coal mining company, plans to sell $400 million of five-year dollar bonds, according to a person familiar with the matter, who asked not to be identified as details are private. Moody’s rated the debt B1 and S&P ranked it BB-, one step higher.

(Added Oct. 19. See 1393 HK .)

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.

Offerings in Pipeline

CODELCO, the world’s biggest copper producer, hired Deutsche Bank AG and HSBC Holdings Plc to manage a bond sale, said a person familiar with the transaction who declined to be identified because terms aren’t set. The state-owned company led the rescue of 33 miners trapped half a mile below Chile’s Atacama Desert.

CREDIT BANK OF MOSCOW plans to sell five-year dollar bonds, according to a person familiar with the transaction. The sale of Reg S securities is being arranged by Commerzbank AG, ING Groep NV and Raiffeisen Bank International, the banker said.

DOHA BANK QSC, Qatar’s third-largest bank, hired Morgan Stanley and JPMorgan Chase & Co. to manage a planned $500 million bond sale, its chief executive officer said. The offering, announced on the Qatar Exchange website, will be marketed to investors in the U.S., Europe and the Middle East, Raghavan Seetharaman said in an Oct. 20 telephone interview.

HUTCHISON WHAMPOA LTD., the Hong Kong-based telecoms, ports and property company owned by Li Ka-Shing, hired Goldman Sachs Group Inc. to sell perpetual hybrid dollar notes, according to a person familiar with the matter. Hutchison’s notes, which will be senior only to the company’s shares, were assigned preliminary ratings of BBB by Standard & Poor’s and Fitch Ratings, according to separate statements by those companies. The notes can be bought back in October 2015 and will become floating-rate paying an additional 100 basis points of interest in October 2020 if not already redeemed, Fitch said.

SANTANDER U.K. PLC, a unit of Spain’s largest bank, plans to sell mortgage-backed securities, according to two people familiar with the transaction. The lender hired Barclays Capital, Bank of America Merrill Lynch and JPMorgan Chase & Co. to help its investment banking unit to arrange the transaction, said the people, who declined to be named before the deal is completed. Santander will meet European and U.S. investors next week before pricing the deal in November. The notes will be issued in dollars, pounds and euros and sold through Holmes Master Issuer PLC Series 2010-1.

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.

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.

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.

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 sapnam@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

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