Affinity Plans Debt as Sales Top $1 Trillion: New Issue Alert
Affinity Group Inc., a vendor of club memberships and publications to recreational groups, is marketing debt as U.S. corporate bond sales topped $1 trillion this year.
Affinity may sell $325 million of six-year notes and use proceeds to repay debt, according to a person familiar with the offering who declined to be identified because terms aren’t set.
Companies including Ventura, California-based Affinity, Cincinnati Bell Inc. and Petco Animal Supplies Inc. of San Diego, are planning debt as dollar-denominated corporate bonds sales surpassed $1 trillion for the second-straight year and fourth time since 2006, when the mark was first reached.
Volume, which at $1.01 trillion is behind the pace set by last year’s $1.23 trillion record issuance, is surging as investment-grade yields fall to the lowest since at least 1986, and absolute yields on junk-rated debt touch the lowest in more than five years.
The extra yield investors demand to own investment-grade corporate bonds fell 1 basis point yesterday to 175 basis points, while absolute yields rose 2 basis points to 3.59 percent, according to the Bank of America Merrill Lynch U.S. Corporate Master Index.
High-yield spreads narrowed 3 basis points to 576 basis points yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Yields on the debt fell 2 basis points to 7.56 percent, the lowest since March 15, 2005, the index data show.
United Parcel Service Inc. and LG&E & KU Energy LLC led $12 billion in U.S. corporate investment-grade bond sales yesterday, according to data compiled by Bloomberg. Affinion Group Inc. led speculative-grade issuance of $1.67 billion, Bloomberg data show.
The following is a description of at least $8.93 billion of pending sales of dollar-denominated bonds in the U.S.
Investment Grade
INTERNATIONAL FINANCE CORP., the private-sector arm of the World Bank, plans to sell U.S. dollar-denominated bonds in a benchmark offering, according to a person familiar with the transaction. The Washington-based organization hired Deutsche Bank AG, Royal Bank of Scotland Group Plc and UBS AG to manage the sale, said the person, who declined to be identified because terms aren’t set. Benchmark offerings are 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
ODEBRECHT DRILLING plans to sell $1.5 billion of notes denominated in U.S. dollars, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.
CYRELA BRAZIL REALTY SA EMPREENDIMENTOS E PARTICIPACOES, Brazil’s biggest homebuilder, hired Banco do Brasil SA, Credit Suisse Group AG, Itau Unibanco Holding SA and Morgan Stanley to arrange bond investor meetings, according to a person familiar with the matter. Cyrela will meet with investors in Asia, Europe and the U.S., said the person, who declined to be identified because the conversations 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
PETCO ANIMAL SUPPLIES INC. plans to sell $625 million of senior unsecured notes, according to Standard & Poor’s. Proceeds may be used along with a $1.1 billion term loan to refinance debt and pay a $700 million dividend, S&P said in a Nov. 8 statement. S&P rated the notes CCC+.
CINCINNATI BELL INC. said it plans to offer an additional $275 million in aggregate principal amount of its 8.375 percent senior notes due 2020, according to a Nov. 8 statement distributed by Business Wire.
BERRY PLASTICS CORP., the container maker owned by Apollo Global Management LLC and Graham Partners Inc., may sell $800 million of 10-year notes, according to a person familiar with the offering. Proceeds may be used to refinance the company’s fixed-rate notes due in 2014, said the person, who declined to be identified because terms aren’t set.
PRECISION DRILLING CORP., an oilfield drilling and energy- service provider, plans to sell $550 million of senior unsecured notes due in 2020, according to a company statement distributed by Marketwire. Proceeds may be used, along with cash on hand, to repay about $581 million of debt outstanding under the company’s credit facilities, according to the statement.
ALLEN SYSTEMS GROUP INC., a closely held business-software company, may sell $300 million of six-year notes, according to a person familiar with the offering. Proceeds will be used to refinance debt and pay a dividend, said the person, who declined to be identified because terms aren’t set.
GENESIS ENERGY LP, the Houston-based crude-oil-distribution partnership, plans to sell $200 million of eight-year notes to help pay for the purchase of a 50 percent equity interest in Cameron Highway Oil Pipeline Co., according to a statement distributed by Business Wire. Genesis Energy will redeem the notes if the acquisition isn’t completed, the company said in the statement.
AFFINITY GROUP INC. plans to sell $325 million of six-year notes, according to a person familiar with the offering. Proceeds may be used to repay debt, said the person, who declined to be identified because terms aren’t set.
CALFRAC WELL SERVICES LTD., an oilfield-services provider, plans to sell $400 million of senior notes due in 2020, according to a statement distributed by CNW Group. Proceeds may be used to repay debt, including to fund a tender offer for the company’s 7.75 percent senior notes due in 2015, and for general corporate purposes, the Calgary-based company said. The notes may be issued through the company’s Calfrac Holdings LP unit, the statement said.
MEDASSETS INC., the provider of supply-chain and cost- management services to health-care companies, plans to sell as much as $360 million of debt due in 2018, the company said in a Nov. 3 statement distributed by Business Wire. Proceeds from the offering of senior notes may be used to fund a portion of the acquisition of the Broadlane Group, Alpharetta, Georgia-based MedAssets said. MedAssets said Sept. 14 that it will buy Dallas- based Broadlane for about $850 million in cash, paying $725 million at closing and the rest in January 2012.
BURLINGTON COAT FACTORY WAREHOUSE CORP., the Bain Capital LLC-owned purveyor of discount apparel, plans to sell $500 million of eight-year senior unsecured notes to refinance high- coupon debt and fund a dividend. Proceeds may be used to repay the company’s existing term loan facility, fund a tender offer for outstanding debt and pay a dividend to equity holders, the company said in a Nov. 3 statement distributed by Business Wire.
MERCER INTERNATIONAL INC., a Vancouver-based pulp manufacturer, plans to sell $300 million of senior notes, the company said in a Nov. 2 statement distributed by Globe Newswire. Proceeds will be used to help tender for the company’s outstanding 9.25 percent senior debt maturing in 2013, according to the statement.
PT ENERGI MEGA PERSADA, Indonesia’s second-biggest listed oil company, hired Nomura Holdings Inc. to help it with a dollar bond sale, according to a person familiar with the matter who declined to be identified because terms aren’t set.
SI ORGANIZATION INC., the Lockheed Martin Corp. unit formerly known as Enterprise Integration Group, may sell $175 million of senior subordinated notes, according to Standard & Poor’s. Proceeds may be used with $340 million of bank debt and $370 million of new common stock to pay for its acquisition by Veritas Capital, S&P said.
TRANSDIGM GROUP INC., the aircraft-components manufacturer that’s buying rival supplier McKechnie Aerospace Holdings Inc., plans to sell $780 million of senior subordinated notes to help fund the acquisition, the Cleveland-based company said in a filing with the Securities and Exchange Commission. The company is also planning a $900 million term loan and a $300 million revolving credit line, according to the filing. The notes were rated B3 by Moody’s.
PT MNC SKY VISION, an Indonesian provider of pay-television services, hired HSBC Holdings Plc and Standard Chartered Bank for a sale of five-year senior secured guaranteed notes that are callable after three years, according to two people with knowledge of the sale, who declined to be identified because terms aren’t set.
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.
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.
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.
Offerings in Pipeline
PERU filed a registration statement with the U.S. Securities and Exchange Commission on Nov. 8 to offer dollar- denominated bonds.
JORDAN is selling $750 million of five-year bonds that will be priced to yield 4.125 percent, according to two people with knowledge of the sale. Arab Bank Plc, Credit Suisse Group AG, HSBC Holdings Plc and JPMorgan Chase & Co. are managing the sale.
AMERICAN INTERNATIONAL GROUP INC., the bailed-out insurer, plans to raise money in a debt sale as the company moves toward independence from the U.S. government, it said in a regulatory filing. “AIG intends to re-access the long-term debt markets in the fourth quarter of 2010,” it said in the filing.
PTT EXPLORATION & PRODUCTION PCL, Thailand’s only listed oil and gas explorer, plans to sell bonds denominated in U.S. dollars, according to a person familiar with the transaction. PTT Exploration hired Barclays Plc to manage the sale, said the person, who declined to be identified because terms aren’t set. Barclays is arranging a U.S. dollar-denominated medium-term note program for the company, the person said.
INTERNATIONAL PETROLEUM INVESTMENT CO. plans to meet bond investors in the United Arab Emirates, according to two people with knowledge of the marketing. Goldman Sachs Group Inc., Bank of America Corp., HSBC Holdings Plc, National Bank of Abu Dhabi, Standard Chartered Bank and Royal Bank of Scotland Group Plc are arranging the meetings, said the people, who declined to be identified because terms aren’t set.
QATAR NATIONAL BANK plans to sell dollar-denominated bonds, according to two people with knowledge of the sale. The company will meet with investors in Asia and Europe, said the people, who declined to be identified because terms aren’t set. Barclays Capital, BNP Paribas SA, JPMorgan Chase & Co. and Standard Chartered Bank will manage the issue with QNB Capital, the people said.
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.
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.
TURKIYE IS BANKASI AS hired JPMorgan Chase & Co., the Royal Bank of Scotland Plc, Standard Bank Plc and Standard Chartered to help find buyers for a planned bond sale during meetings in the U.S. and Europe. Isbank made the announcement to the Istanbul Stock Exchange after the market regulator approved a sale of 1.45 billion liras ($1.03 billion) of bonds by the bank. Isbank said the sale will be in dollars.
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.
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 reporters on this story: Boris Korby in New York at bkorby1@bloomberg.net;
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.
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