Briggs & Stratton Plans Debt as Sales Pause: New Issue Alert

Briggs & Stratton Corp., the world’s largest maker of gasoline engines for outdoor power equipment, is marketing debt after corporate bond sales plunged while Federal Reserve policy makers met.

Briggs & Stratton plans to sell $200 million of 10-year notes and use the proceeds to redeem debt maturing in March, it said in a Dec. 13 statement distributed by PR Newswire. The offering may occur this week, according to a person familiar with the offering who declined to be identified because terms aren’t set.

Companies sold $747 million of debt in the U.S. yesterday, the least since sales halted during the Thanksgiving holiday almost three weeks ago, as Federal Reserve policy makers reiterated their plan to expand record monetary stimulus. Issuance plunged from $6.7 billion the previous day, according to data compiled by Bloomberg.

“We didn’t see much issuance today and there was really no reason to come to market,” said Guy LeBas, chief fixed income strategist and economist at Janney Montgomery Scott LLC in Philadelphia. “There’s no incentive to step into the kind of volatility that a Fed statement can invite.”

CNO Financial Group Inc., the insurer formerly known as Conseco Inc., sold $275 million of debt after cutting the size of its offering from $300 million, according to a person familiar with the transaction. Palm Beach Gardens, Palm Beach Gardens, Florida-based Aurora Diagnostics Inc. tightened creditor protections before issuing $200 million of notes, $30 million less than it marketed earlier, another person said.

Junk Spreads

The extra yield investors demand to own high-yield, high- risk bonds instead of Treasuries narrowed 16 basis points to 542 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. Absolute yields fell 3 basis points to 7.88 percent, the index data show.

The narrowing spreads reflected a tumble in Treasury bond prices as Federal Reserve officials said the U.S. recovery is continuing and maintained a $600 billion program of debt purchases. The yield on 10-year Treasury bonds rose to 3.47 percent, the highest since May, from 3.28 percent.

High-yield, or junk, bonds are rated below Baa3 by Moody’s Investors Service and less than BBB- by Standard & Poor’s. A basis point is 0.01 percentage point.

Briggs & Stratton’s notes are graded Ba3 by Moody’s and an equivalent BB- by S&P. David Rodgers, the Wauwatosa, Wisconsin- based company’s chief financial officer, didn’t immediately return a phone call seeking comment on the sale.

Investment-grade corporate bond spreads narrowed 1 basis point to 170 basis points yesterday, while yields on the debt rose 11 basis points to 4.23 percent, according to the Bank of America Merrill Lynch U.S. Corporate Master Index.

Corporate bond sales this week through yesterday total $7.46 billion, compared with $12 billion during the similar period a week earlier, Bloomberg data show.

The following is a description of at least $2.44 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.

FIRST HORIZON NATIONAL CORP. plans to sell $400 million of senior notes, according to a filing with the U.S. Securities and Exchange Commission. Proceeds from the offering, along with a planned sale of common stock, a dividend from the Memphis, Tennessee-based company’s bank unit and cash on hand, will be used to buy back preferred shares and redeem subordinated debentures, according to the filing.

High Yield

BRIGGS & STRATTON CORP. plans to sell $200 million of senior unsecured notes due in 2020, the company said in a statement distributed by PR Newswire. Proceeds will be used with cash on hand to redeem outstanding 8.875 percent senior bonds maturing March 2011 and to pay for related expenses, according to the statement.

SYNIVERSE HOLDINGS INC., the communications-equipment company being acquired by Carlyle Group, plans to sell $475 million of eight-year senior notes, according to a person familiar with the transaction. Proceeds may be used to fund the acquisition, said the person, who declined to be identified because terms aren’t set. The debt may be rated Caa1 by Moody’s Investors Service and B- by Standard & Poor’s, the person said.

RES-CARE INC., a provider of support services to special- needs populations, plans to sell $200 million of senior notes due 2018 through a private placement, the company said in a statement distributed by Globe Newswire. Proceeds may be used to repurchase outstanding senior notes due 2013 and to fund a share exchange where an affiliate of Onex Corp. will acquire Res-Care, according to the statement.

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.

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.

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 a person familiar with the transaction. The debt may yield 9.75 percent to 10 percent, said the person, who declined to be identified because terms aren’t set. 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 person 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, 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 S&P. 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 hasn’t 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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