CDW Plans Debt Amid Bonds’ First Loss Since May: New Issue Alert

CDW Corp., the technology-services provider taken private by Madison Dearborn Partners LLC in 2007, is marketing debt as U.S. corporate bonds suffer their first monthly loss since May.

CDW plans to sell $300 million of eight-year notes to help repay bank debt due in 2014, according to a Nov. 29 statement by Standard & Poor’s, which assigned the securities a grade of B-. Moody’s Investors Service ranked the Vernon Hills, Illinois- based company’s senior secured debt B2, one step higher.

Investment-grade bonds dropped 0.9 percent last month and high-yield debt plunged 1.1 percent amid investor concern that Ireland’s debt crisis could spread. Issuance last week was $2.89 billion, the least since the period ended May 7, when sales were $2.15 billion, according to data compiled by Bloomberg.

The extra yield investors demand to own speculative-grade corporate bonds instead of Treasuries rose 29 basis points last month to 622 basis points, while absolute yields climbed 38 basis points to 8.13 percent, according to the Bank of America Merrill Lynch U.S. High Yield Master II index.

Junk bonds, rated below Baa3 by Moody’s and less than BBB- by S&P, lost 3.5 percent in May. A basis point is 0.01 percentage point.

Investment-grade spreads widened 5 basis points to 182 basis points in November, according to Bank of America Merrill Lynch U.S. Corporate Master Index. Yields climbed 23 basis points to 3.87 percent. The bonds lost 0.6 percent in May.

American International Group Inc., the insurer rescued by the U.S. government in 2008, sold $2 billion of three- and 10- year notes to lead $4.77 billion of issuance yesterday, Bloomberg data show. Companies sold $97 billion of debt last month, compared with $103 billion in October and $98 billion in November 2009.

The following is a description of at least $4.35 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

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.

High Yield

ENERGY XXI (BERMUDA) LTD. may sell up to $700 million of notes due in 2017 through its Energy XXI Gulf Coast Inc. unit, the company said in a statement distributed by Globe Newswire. Proceeds will be used to help pay for the acquisition of shallow-water Gulf of Mexico shelf oil and natural gas interests from ExxonMobil Corp. and to repay debt, according to the statement.

BUMBLE BEE ACQUISITION CORP. plans to sell $605 million of seven-year notes, according to a person familiar with the transaction. The debt may be issued as soon as next week, said the person, who declined to be identified because terms aren’t set. Bumble Bee Foods LLC is being acquired by Lion Capital LLP in a $980 million leveraged buyout.

AFREN PLC, a U.K. oil and gas explorer focused on West Africa, hired Deutsche Bank AG, Goldman Sachs Group Inc. and BNP Paribas SA to manage a sale of senior secured bonds in dollars, according to two people with knowledge of the sale. The company will meet bond investors in Europe and the U.S., said the people, who declined to be identified because terms aren’t set.

BRESNAN BROADBAND HOLDINGS LLC plans to sell $250 million of eight-year senior notes through BBHI Acquisition LLC to help finance its purchase by Cablevision Systems Corp., according to a person familiar with the transaction. Proceeds will be used, along with borrowings under a senior secured credit line and an equity contribution from a Cablevision unit, to finance the acquisition of Bresnan Broadband and provide it with working capital, said the person, who declined to be identified because terms aren’t set.

CDW CORP., the technology-services provider taken private by Madison Dearborn Partners LLC in 2007, plans to sell $300 million of senior secured notes due 2018, according to a note from S&P. The ratings company graded the debt B-, according to the note. CDW also plans an extended term loan B due 2017, S&P said in the note. Proceeds from both will be used to partially repay existing secured term debt due 2014, the note said.

CITADEL BROADCASTING CORP. plans to sell $500 million of eight-year senior unsecured notes, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. Proceeds may be used along with $400 million in senior secured first-lien credit facilities and cash on hand to refinance existing debt, according to a Nov. 26 note from Moody’s, which grades the bonds Ba3.

DARLING INTERNATIONAL INC., a provider of recycling and recovery services to the food industry, plans to sell $250 million of senior notes due 2018, the company said in a statement distributed by PR Newswire. Proceeds may be used to help finance the Irving, Texas-based company’s acquisition of Griffin Industries Inc., according to the statement.

CAMBIUM LEARNING GROUP INC. plans to sell $175 million of senior secured notes maturing in 2016, the company said in a statement distributed by PR Newswire. Proceeds may be used to repay senior unsecured debt and borrowings under the company’s existing secured credit line, according to the statement. Cambium also plans to enter into an asset-based revolving credit facility of as much as $40 million, the statement said.

NATIONAL AMUSEMENTS INC., the movie-theater and holding company controlled by billionaire Sumner Redstone, plans to sell $390 million of seven-year notes to refinance a bank credit line, according to a person familiar with the transaction who declined to be identified because terms aren’t set. Moody’s rated the issue B1.

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.

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.

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 notes will mature in 2018, according to a Nov. 29 company statement. 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.

Offerings in Pipeline

NOVELIS INC., the U.S.-based aluminum unit of India’s Hindalco Industries Ltd., plans to sell $2.5 billion of notes to help pay for a recapitalization, according to a statement distributed by PR Newswire. Novelis will also seek a $1.5 billion term loan and an $800 million asset-based loan, the Atlanta-based company said today in the statement.

CONVATEC INC. plans to offer “one or more series” of new notes to refinance substantially all the company’s debt under existing credit lines, it said in a Nov. 24 statement distributed by Business Wire. The company also plans a new senior secured credit facility for the refinancing, according to the statement.

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.

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.

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.

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.

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.

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.

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: Tim Catts in New York at tcatts1@bloomberg.net.

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

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