WII Components Inc., the maker of cabinet doors owned by Behrman Capital LP, is marketing $115 million of five-year notes as Barclays Capital forecasts the record pace of high-yield bond sales to continue through 2011.
WII may use proceeds to help fund a tender offer for outstanding 10 percent senior securities due 2012, the company said in an Oct. 25 statement distributed by Business Wire.
New junk-rated issuance next year may total $225 billion to $250 billion, Barclays Capital strategists led by Bradley Rogoff wrote in a Nov. 19 note to clients. This compares with $234 billion so far this year, already 53 percent more than 2009’s record total, according to Barclays.
“The dearth of yieldy alternatives in fixed income and benign default outlook of 2-2.5 percent should support healthy demand for high yield products in 2011,” the strategists wrote.
The extra yield investors demand to own speculative-grade corporate bonds instead of Treasuries was up 1 basis point at 581 basis points on Nov. 19, while absolute yields rose 3 basis points to 7.8 percent, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. Spreads widened 6 basis points and yields increased 14 basis points last week.
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.
S&P assigned WII’s debt a grade of B-.
Last Week’s Sales
Ally Financial Inc., the auto and home lender formerly known as GMAC Inc., and Houston-based El Paso Pipeline Partners LP led $9.9 billion of high-yield debt sales in the U.S. last week. Total new-issue volume was $23.1 billion, down from $36.1 billion the previous week.
Spreads on investment-grade corporate bonds were unchanged at 175 basis points, and yields fell 1 basis point to 3.84 percent on Nov. 19, according to the Bank of America Merrill Lynch U.S. Corporate Master Index. Spreads were down 1 basis point while yields rose 9 basis points last week, the index data show.
The following is a description of at least $4.41 billion of pending sales of dollar-denominated bonds in the U.S.
ENTERGY CORP. may sell $100 million of debt due in June 2041, according to a person familiar with the offering. The first-mortgage bonds may be issued at a yield of 5.875 percent to 6 percent, said the person, who declined to be identified because terms aren’t set. The debt will be sold through the company’s Entergy Louisiana LLC unit, the person said.
TELEPHONE & DATA SYSTEMS INC., a telecommunications services provider, plans to sell $200 million of 49-year notes that will be non-callable for five years, according to a person familiar with the transaction. The Chicago-based company’s debt may yield 6.875 percent to 7 percent, said the person, who declined to be identified because terms aren’t set. The bonds may be rated Baa2 by Moody’s Investors Service and BBB- by Standard & Poor’s, the person said. Proceeds will be used to redeem the company’s 7.6 percent notes due in 2041, according a regulatory filing that didn’t specify the size, timing or maturity of the sale.
FIRST GULF BANK PJSC plans to sell five-year dollar- denominated bonds that may yield between 3.25 percent and 3.5 percent, said three people familiar with the transaction, who declined to be identified because terms aren’t set. BNP Paribas SA, Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc and National Bank of Abu Dhabi PJSC are arranging meetings with investors, two people said on Nov. 1. The Abu Dhabi-based lender is rated A2 by Moody’s.
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.
MURRAY ENERGY CORP. plans to sell $150 million of seven- year senior notes, the Pepper Pike, Ohio-based company said in a statement distributed by Business Wire. Proceeds may be used to expand production capacity and preparation plan processing capacity at certain mining operations, according to the statement.
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. S&P raised its rating on the company one step to BB on Sept. 30.
BRIGHTSTAR CORP., a distributor of wireless communication devices, plans to sell $250 million of six-year senior notes that are non-callable for three years, according to a person familiar with the transaction. The company plans to use proceeds to refinance existing debt, said the person, who declined to be identified because terms aren’t set. Jeffries Group Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Barclays Plc and Credit Suisse Group AG are managing the sale, the person said.
DELONG HOLDINGS LTD., a Singapore-based steel trader, hired Credit Suisse Group AG to help it organize meetings with investors ahead of an international sale of guaranteed senior notes. Money raised will be used to redeem 5 percent convertible bonds due 2012, to repay bank loans and for acquisitions relating to iron ore and other raw materials used by the steel industry, the company said in a statement to Singapore’s stock exchange. The dollar-denominated notes were assigned a provisional rating of B3 by Moody’s Investors Service, the ratings company said in a note.
FLAKEBOARD CO., the Canadian producer of fiberboard and particleboard used to build furniture and countertops, plans to sell $225 million of senior secured notes maturing in 2017, S&P said in a statement. The ratings company grades the proposed U.S. dollar-denominated debt as B, according to the statement.
PERFORMANCE FOOD GROUP INC., the private-equity-owned food and food-related product distributor, plans to sell $550 million of senior notes due in 2017, according to a person familiar with the transaction. Credit Suisse Group AG, Wells Fargo & Co., Bank of America Corp. and Macquarie Group Ltd. are managing the sale, according to the person, who declined to be identified because terms aren’t set.
SHIP FINANCE INTERNATIONAL LTD. plans to sell $400 million of senior notes due in 2020, the owner of crude-oil tankers and dry-bulk carriers said in a regulatory filing. Proceeds may be used to repay debt, including a tender offer for the Hamilton, Bermuda-based company’s existing senior notes due in 2013, and for general corporate purposes, according to the filing. Jefferies Group Inc. and Goldman Sachs Group Inc. are managing the sale, the filing said.
VIETNAM NATIONAL COAL-MINERAL INDUSTRIES GROUP, known as Vinacomin, plans to sell 10-year, U.S. dollar-denominated notes in a benchmark offering, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. Vinacomin may sell the debt at a yield in the low 7 percent area, another person said. The company is rated Ba3 by Moody’s Investors Service and BB, one step lower, by Standard & Poor’s. Benchmark offerings are typically at least $500 million.
SPENCER SPIRIT HOLDINGS INC., the mall-based retailer of accessory and Halloween items, plans to sell $150 million of senior-secured notes due in 2016, according to a person familiar with the transaction. Proceeds may be used to repay existing debt and make a distribution to shareholders, said the person, who declined to be identified because terms aren’t set. Wells Fargo & Co. and UBS AG are managing the sale, the person said.
RAIN CII CARBON LLC and CII Carbon Corp. plan to sell $400 million of senior secured notes, according to a person familiar with the transaction. Proceeds may be used to repay debt, said the person, who declined to be identified because terms aren’t set. Citigroup Inc., Goldman Sachs Group Inc. and Jefferies Group Inc. are managing the offering for the units of Rain Commodities Ltd. of Hyderabad, India, the person said.
CLUBCORP INC., an owner and operator of golf courses, country clubs and resorts, plans to sell $415 million of senior unsecured notes maturing in 2018, according to a person familiar with the transaction. The debt will be non-callable for four years, said the person, who declined to be identified because terms aren’t set. Citigroup Inc. is managing the offering, the person said.
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.
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.
Offerings in Pipeline
RURAL ELECTRIFICATION CORP., India’s state-controlled lender to power projects, hired Credit Agricole CIB, Royal Bank of Scotland Group Plc and Standard Chartered Plc to sell $500 million of bonds. Rural Electrification aims to price 5.5-year notes to yield between 195 basis points and 200 basis points more than similar-maturity U.S. Treasuries Finance Director Hari Das Khunteta said in a telephone interview from New Delhi on Nov. 10.
YUZHOU PROPERTIES CO. plans to sell bonds denominated in U.S. dollars, according to a person familiar with the transaction. Bank of China Ltd., Nomura Holdings Inc. and Royal Bank of Scotland Group Plc are arranging meetings with investors in Asia, Europe and the U.S., said the person, who asked not to be identified because the details are private.
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.
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.
QATAR NATIONAL BANK may sell five-year dollar-denominated bonds, according to two people with knowledge of the transaction. The debt may yield in the 200 basis-point area more than the benchmark mid-swap rate, 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.
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.
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.
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.
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