Novelis Inc., the U.S.-based aluminum unit of India’s Hindalco Industries Ltd., is marketing debt as company bond sales more than tripled from the corresponding day last week.
Novelis plans to sell $2.5 billion of 7- and 10-year notes, according to a person familiar with the transaction. The debt will be issued as soon as Dec. 10, said the person, who declined to be identified because terms aren’t set.
Company bond sales rebounded last week after a drop in issuance during the five days ended Nov. 26, as the European Central Bank extended an emergency loan program and President Jean-Claude Trichet pledged to fight “acute” financial market tensions. Issuance of $7.33 billion yesterday compares with $2 billion on Nov. 29, and $23.4 billion for all of last week, according to data compiled by Bloomberg.
“Even with the uptick in volatility we’ve had over the last couple of weeks, financing costs are still very attractive, particularly when you look at them on a historical basis,” said Andrew Karp, head of investment-grade debt syndicate for the Americas at Bank of America Merrill Lynch.
Karp estimated there will be about $30 billion of investment-grade issuance this month, mainly in the first half.
The extra yield investors demand to own investment-grade corporate bonds instead of Treasuries was unchanged at 179 basis points yesterday, while absolute yields rose 6 basis points to 4.05 percent, according to the Bank of America Merrill Lynch U.S. Corporate Master index.
Novelis plans to use its bond offering along with borrowings under a $1.5 billion secured bank loan to refinance debt and pay for a $1.7 billion distribution to its parent, the Atlanta-based company said in a Nov. 30 statement.
High-yield corporate bond spreads widened 3 basis points to 595 basis points yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. Yields on the debt fell 4 basis points to 7.96 percent.
High-yield, or junk, debt is rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s. A basis point is 0.01 percentage point.
The following is a description of at least $5.7 billion of pending sales of dollar-denominated bonds in the U.S.
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.
STONE STREET TRUST plans to sell five-year notes in a benchmark offering, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. Benchmark sales are typically at least $500 million.
HERTZ GLOBAL HOLDINGS INC., the largest publicly traded U.S. rental car service, will sell $500 million of senior notes due 2021 to repay existing debt, according to a company statement. Proceeds from the notes and from a sale of 7.5 percent bonds in September will be used to redeem its 10.5 percent notes due in 2016 and $625 million of 8.875 percent debt maturing in 2014, the statement said. S&P rated the new issue CCC+.
AURORA DIAGNOSTICS INC., a closely held specialized laboratory company, plans to sell $230 million of seven-year senior unsecured notes, according to a person familiar with the transaction. The company may issue the debt as soon as this week, said the person, who declined to be identified because terms aren’t set. The bonds may be issued through the company’s Aurora Diagnostics Holdings LLC and Aurora Diagnostics Financing Inc. units, the person said.
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. The company may issue 7- and 10-year notes, according to a person familiar with the transaction, who declined to be identified because terms aren’t set.
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.
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.
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.
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.
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