Bumble Bee Plans Debt as Defaults May Decline: New Issue Alert

Bumble Bee Foods LLC, the maker of canned seafood products and the target of a leveraged buyout by Lion Capital LLP, plans to sell seven-year debt as high-yield corporate bond default rates may decline.

Bumble Bee, based in San Diego, is marketing $605 million of senior secured notes, according to a person familiar with the transaction. The debt may be sold as soon as today, said the person, who declined to be identified because terms aren’t set.

Speculative-grade defaults will fall to 2 percent to 2.5 percent in 2011, Barclays Capital strategists led by Bradley Rogoff wrote in a Dec. 3 note to clients. That’s down from 13.2 percent in 2009 and 3.58 percent for the 12-month period ending October 2010, according to Barclays.

“Many of the more at-risk issuers have already taken advantage of the open primary market to push out maturities, clearing their runway for multiple years,” the strategists wrote.

The extra yield investors demand to own speculative-grade corporate bonds instead of Treasuries was down 1 basis point to 592 basis points on Dec. 3, while absolute yields fell 3 basis points to 8.01 percent, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. Spreads narrowed 2 basis points and yields rose 12 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.

Moody’s Investors Service assigned Bumble Bee’s debt a B2 grade, while Standard & Poor’s rated it B+.

HP, TransDigm Sales

Hewlett-Packard Co., the world’s largest computer maker, and TransDigm Group Inc., the aircraft-components manufacturer that’s buying rival supplier McKechnie Aerospace Holdings Inc. led investment-grade and junk offerings last week, according to data compiled by Bloomberg.

HP sold $2 billion of 5- and 10-year notes to pace $16.8 billion in investment-grade sales, Bloomberg data show, while TransDigm almost doubled the size of its offering to $1.55 billion, leading $6.47 billion of speculative-grade issuance.

“Corporate credit markets recovered nicely on the hopes that ECB involvement would help support the market,” said George Bory, a Stamford, Connecticut-based strategist with UBS AG. The European Central Bank extended an emergency loan program last week, and President Jean-Claude Trichet said it will keep offering banks as much cash as they want through the first quarter for periods as long as three months at fixed interest rates.

Investment-grade corporate bond spreads fell 1 basis point to 179 basis points on Dec. 3, according to the Bank of America Merrill Lynch U.S. Corporate Master index. Yields on the debt fell 2 basis points to 3.99 percent. Spreads widened 3 basis points and yields were up 14 basis points last week, the index data show.

The following is a description of at least $3.76 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

CONVATEC INC., a medical products business, plans to sell $1.87 billion of bonds to refinance debt used to fund its leveraged buyout, according to three people with knowledge of the transaction. The company, owned by Nordic Capital AB and Avista Capital Partners, will issue $1.18 billion of eight-year senior unsecured notes denominated in dollars and euros and the equivalent of $690 million of seven-year senior secured notes in euros, said the people, who declined to be identified because the sale is private.

TRINIDAD DRILLING LTD. plans to sell $450 million of eight- year U.S. dollar denominated notes, according to a person familiar with the transaction. The senior unsecured debt may be non-callable for four years, said the person, who declined to be identified because terms aren’t set.

IFH PERU LTD. plans to add up to $100 million to its 8.625 percent 2019 bonds, according to two people with knowledge of the sale. Barclays Capital and IM Trust are managing the sale.

PILGRIM’S PRIDE CORP., the chicken producer acquired by Brazilian meat processor JBS SA last year, plans to sell $350 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 to repay borrowings under the company’s existing term loan credit facilities, according to a statement from the Greeley, Colorado- based company.

SWIFT SERVICES HOLDINGS INC., a unit of the largest truckload carrier in North America, plans to sell $490 million of eight-year senior second-priority secured notes, according to two people with knowledge of the sale. Bank of America Corp., Morgan Stanley, Wells Fargo Securities, Citigroup Inc., Deutsche Bank AG and UBS AG are managing the sale. The notes will be used to repay existing indebtedness, the people said.

MDA LENDING SOLUTIONS, the information- and settlement- services provider to real estate lenders, may sell $175 million of senior subordinated notes to help pay for its leveraged buyout by TPG Capital, according to a Moody’s statement. The MacDonald, Dettwiler & Associates Ltd. unit is also seeking $400 million of loans.

BUMBLE BEE ACQUISITION CORP. plans to sell $605 million of seven-year notes, according to a person familiar with the transaction, 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. Moody’s assigned the debt a B2 grade, while Standard & Poor’s rated it B+.

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.

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.

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. The notes may yield 8.25 percent to 8.5 percent, said the person, 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.

Offerings in Pipeline

AMERICAN INTERNATIONAL GROUP, the insurer rescued by the U.S. government, is contemplating a new debt sale, a person familiar with the matter said. The firm hasn’t considered a timeline for when it might sell more bonds, said the person, who declined to be identified because the terms aren’t set. AIG sold $2 billion of bonds Dec. 1 in its first offering since it was rescued by the U.S. government in 2008.

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 in 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.

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: 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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