Boyd Plans Bonds as Corporate Earnings Exceed Estimates: New Issue Alert

Boyd Gaming Corp., operator and half-owner of the Borgata Hotel Casino & Spa in Atlantic City, New Jersey, is marketing notes before corporate bond issuance accelerates amid better-than-expected quarterly results.

Boyd Gaming plans to issue $500 million of eight-year senior notes, the Las Vegas-based company said in an Oct. 26 statement distributed by PR Newswire.

Companies have issued $91.6 billion of bonds this month, according to data compiled by Bloomberg. Per-share earnings have topped estimates at 197 of the 232 companies in the Standard & Poor’s 500 Index that have reported third-quarter results since Oct. 7, Bloomberg data show. The results suggest that issuance may be “robust” between now and the end of the year as company fundamentals improve, said Tom Murphy, a money manager at Columbia Management in Minneapolis.

“Earnings are coming in stronger than most people anticipated,” said Murphy, who helps oversee more than $22 billion of investment-grade credit. “Based on where yields are, where spreads are, and the overall strong tone in the market, our expectation is that companies as they come out of earnings season will try to get through that window before Thanksgiving.”

The extra yield investors demand to own investment-grade debt instead of Treasuries narrowed 2 basis points to 176 basis points yesterday, according to Bank of America Merrill Lynch’s U.S. Corporate Master index. Yields rose 4 basis points to 3.71 percent.

Companies sold $97.5 billion of debt in October 2009, Bloomberg data show.

Travelers Debt

Travelers Cos., the insurer added to the Dow Jones Industrial Average in 2009, helped lead $5.38 billion of bond sales yesterday, Bloomberg data show.

The insurer on Oct. 21 reported operating profit, which excludes some investment results, of $1.81 a share, beating the $1.47 average estimate of analysts surveyed by Bloomberg.

“Company fundamentals are in a pretty strong place,” Murphy said. “Any time someone comes out and says corporate America can’t squeeze any more cost cuts to make themselves more efficient, that’s what it looks like they’re doing.”

Travelers sold $750 million of 5.35 percent, 30-year bonds and $500 million of 3.9 percent, 10-year notes in an offering boosted from $1 billion, the data show.

Georgia-Pacific LLC, the tissue-maker owned by privately held Koch Industries Inc., issued $1.25 billion of debt in a split-rated 10-year offering, Bloomberg data show.

Junk Spreads

Spreads on high-yield debt narrowed 6 basis points to 573 basis points yesterday, according to the Bank of America Merrill Lynch High Yield Master II Index. Yields dropped 1 basis point to 7.66 percent, the lowest since May 2007. High-yield debt is rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s. A basis point is 0.01 percentage point.

Proceeds from Boyd Gaming’s bond sale will be used to buy back senior subordinated notes due 2012 and to repay bank loans, according to the company’s statement. The other half of the Borgata is owned by MGM Resorts International, which has put it up for sale; Boyd said this week it would not bid on that stake.

The following is a description of at least $5.69 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

OAO LUKOIL, a Russian oil producer, plans to sell dollar bonds with a 10-year maturity, said two people familiar with the sale. Barclays Capital, ING Groep NV and Royal Bank of Scotland Group Plc are managing the sale, said the person, who declined to be identified because terms aren’t set. The company is rated Baa2 at Moody’s and BBB- by S&P.

CODELCO, the world’s biggest copper producer, may sell as much as $1 billion of 10-year notes, according to a person familiar with the transaction. The company hired Deutsche Bank AG and HSBC Holdings Plc to the offering, said the person, 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.

KOREA NATIONAL OIL CORP. hired Barclays Plc, BNP Paribas SA, Credit Suisse Group AG, Deutsche Bank AG and Korea Development Bank for a benchmark sale of dollar bonds, according to a person familiar with the transaction. The company started marketing the debt on Oct. 27, said the person, who declined to be identified because terms aren’t set. The company known as KNOC said in September it plans to raise $500 million to $1 billion to fund acquisitions. KNOC is rated A1 by Moody’s and A by S&P. A benchmark issue is typically at least $500 million.

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.

Not Rated

TRAVELLERS INTERNATIONAL HOTEL GROUP INC., the Philippines casino operator owned by Alliance Global Group Inc. and Genting Hong Kong Ltd., plans to sell $300 million of seven-year bonds that may yield 7.125 percent, according to a person familiar with the transaction. The company hired UBS AG, Deutsche Bank AG and Banco de Oro Unibank Inc. to help it sell the bonds, said the person, who asked not to be identified because the details are private.

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

ZAO ALROSA plans to sell 10-year bonds in dollars that may be priced to yield about 7.5 percent to 7.75 percent, said two people with knowledge of the sale. The notes will be sold through Alrosa Finance SA, said the people, who declined to be identified because terms aren’t set. The Russian diamond producer is rated Ba3 by Moody’s and BB- at S&P.

QUALITY DISTRIBUTION INC. plans to sell $225 million of second-priority senior secured eight-year notes to redeem outstanding debt, the company said in a statement distributed by Globe Newswire.

BOYD GAMING CORP., operator and half-owner of the Borgata Hotel Casino & Spa in Atlantic City, New Jersey, plans to sell $500 million of eight-year notes, the Las Vegas-based company said in a statement distributed by PR Newswire. Proceeds will be used to buy back senior subordinated notes due 2012 and to repay bank loans, according to the statement.

WII COMPONENTS INC., the manufacturer of wood cabinet doors owned by Behrman Capital LP, plans to sell $115 million of senior secured five-year notes, the company said in an Oct. 25 statement distributed by Business Wire. The notes may be used to help fund a tender for outstanding 10 percent senior securities due 2012, according to the statement. S&P assigned the debt a grade of B-, it said in a statement.

VIKING ACQUISITION INC., the Avista Capital Partners-owned entity that’s buying Clorox Co.’s auto-care business, plans to sell $250 million of notes to pay for the acquisition, according to a statement from Moody’s. Moody’s assigned the senior unsecured debt a grade of Caa1, according to the statement. S&P rates the securities due in 2018 an equivalent CCC+, it said on Oct. 21. Avista Capital Partners is also seeking a $300 million term loan and a $50 million revolving credit line to help pay for the transaction.

CARRIZO OIL & GAS, a Houston-based energy exploration and production company, plans to sell $325 million of notes maturing in 2018 in a private offering, it said in a statement distributed by Marketwire. Proceeds may be used to repay bank debt and to finance a $300 million tender offer for the company’s 4.375 percent convertible senior notes due in June 2028, according to the statement. The debt may yield 8.75 percent to 9 percent, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.

DUNKIN’ BRANDS INC., owner of Dunkin’ Donuts and Baskin- Robbins restaurants, plans to sell $625 million of senior notes and obtain a $1.35 billion senior credit line to repay securitized debt and help fund a dividend, the company said in an Oct. 25 statement distributed by Business Wire. The notes will be issued through Dunkin’ Finance Corp., according to the statement. JPMorgan Chase & Co. and Deutsche Bank AG will manage the bond sale, according to a person familiar with the negotiations, who declined to be identified because the terms are private.

SIMMONS FOODS INC. plans to sell $250 million of second- lien senior secured notes, according to a person familiar with the offering. Proceeds from the debt due in 2017 may be used to help pay for the acquisition of Menu Foods Ltd., said the person, who declined to be identified because terms aren’t set.

PACNET LTD., the operator of undersea phone and Internet cables in Asia, plans to sell $300 million of five-year bonds, according to a person familiar with the matter. Barclays Plc, Credit Suisse Group AG, DBS Group Holdings Ltd. and Standard Chartered Plc are managing the sale of bonds, said the person, who asked not to be identified because the details are private.

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 .)

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 S&P. S&P rated the debt from the private Boca Raton, Florida-based company B.

Offerings in Pipeline

MB PETROLEUM SERVICES, a Middle East oilfield services provider, plans to sell $350 million of bonds, according to a banker involved in the transaction. Barclays Capital, HSBC Holdings Plc and Standard Chartered Plc are managing the issue, which will follow investor meetings in Asia, the United Arab Emirates, Europe and the U.S., the banker said, declining to be identified because terms aren’t set. The notes will be guaranteed by Mohamed Al Barwani Holding Co.

(Added Oct. 28. See website: http://www.mbpetroleum.com )

PTA BANK, or Eastern and Southern African Trade and Development Bank, hired HSBC Holdings Plc and Standard Bank Group Ltd. to arrange bond investor meetings in Europe and Asia, according to two people with knowledge of the sale. The meetings will be held in Hong Kong, Singapore, Zurich, Geneva and London, said the people, who declined to be identified because terms aren’t set. The company may sell dollar bonds after the meetings, the people said.

MAQUINARIA ESPECIALIZADA MXO TRUST, a special-purpose company expected to provide construction machinery services to Corporacion GEO SAB de CV, hired Banco Santander SA to arrange bond investor meetings, according to a person with knowledge of the sale. A dollar bond sale may follow the meetings, to be held in London, Boston, New York and Los Angeles, said the person, who declined to be identified because terms aren’t set.

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.

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. 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 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.

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 in New York at sapnam@bloomberg.net.

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.