Elizabeth Arden Plans Debt as Junk Sales Stir: New Issue Alert

Elizabeth Arden Inc., maker of celebrity perfume lines for Mariah Carey and Taylor Swift, is marketing $225 million of 10-year notes as high-yield, high-risk bond sales showed signs of accelerating.

The cosmetics company plans to use proceeds from the senior notes to fund a tender offer and consent solicitation for its 7.75 percent senior subordinated notes due 2014, it said in a Jan. 7 statement distributed by Globe Newswire.

Last week, $3.37 billion of high-yield bonds were sold, while investment-grade volume was the most ever at $45.4 billion, according to data compiled by Bloomberg.

“We haven’t seen as much issuance as people thought might happen on the high-yield side in January, but now it’s starting to pick up,” said Sabur Moini, a money manager who oversees $1.7 billion of high-yield debt at Payden & Rygel in Los Angeles. “My expectation is that the calendar will grow by quite a bit.”

Issuers plan at least $2.53 billion of speculative-grade debt, up from about $675 million at the end of last year, according to data compiled by Bloomberg.

Relative yields on junk bonds, rated below Baa3 by Moody’s Investors Service and BBB- by Standard and Poor’s, widened 10 points to 523 basis points on Jan. 7, according to Bank of America Merrill Lynch’s U.S. High Yield Master II index, leaving them down 18 basis points for the week. Yields fell 1 basis point on the day and were 17 basis points lower for the week at 7.69 percent.

‘Nice First Week’

“We had a nice first week for high yield,” Moini said in a telephone interview. “People are scurrying to buy paper because we have cash.”

The new notes from Miramar, Florida-based Elizabeth Arden are rated B by S&P, the ratings agency said in a statement.

The extra yield on investment-grade debt widened 1 basis point on Jan. 7 to 163 basis points, leaving spreads 3 basis points narrower for the week, according to the Bank of America Merrill Lynch Corporate Master index. Yields fell 8 basis points for the day and 2 basis points for the week to 4.08 percent. A basis point is 0.01 percentage point.

The following is a description of at least $3.33 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

RURAL ELECTRIFICATION CORP., India’s state-controlled lender to power projects, is likely to sell $500 million of bonds on Jan. 18, Finance Director Hari Das Khunteta said in a telephone interview Dec. 29. Rural Electrification hired Credit Agricole CIB, Royal Bank of Scotland Group Plc and Standard Chartered Plc to sell the bonds. The company earlier planned to sell bonds in December, postponing the offering because of “adverse market conditions,” Khunteta said in a Dec. 3 interview.

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 ($5.2 billion) of debt outstanding.

Not Rated

LAREDO PETROLEUM INC., an independent exploration and production company, plans to sell $300 million of eight-year notes, according to a person familiar with the offering. Proceeds will be used to retire the company’s term loan, repay outstanding revolving-credit-facility borrowings and for general corporate purposes.

High Yield

ELIZABETH ARDEN INC. is marketing a $225 million issue of 10-year senior notes, the cosmetics maker said in a Jan. 7 statement. It plans to use proceeds to finance a tender offer for its outstanding 7.5 percent senior subordinated debt due 2014, the statement said. S&P assigned the new notes a B rating, it said in a statement.

DYCOM INDUSTRIES INC., the service provider to telecommunications companies, may sell $175 million of senior subordinated notes due 2021, the company said in a Jan. 6 statement distributed by PR Newswire. It plans to use proceeds finance a tender and solicitation offer for its $135.5 million in outstanding 8.125 percent senior subordinated notes due 2015, according to the statement. Moody’s rated the new notes Ba3 and S&P graded them BB-, the companies said in separate statements.

UCI INTERNATIONAL INC. plans to sell $250 million of senior notes maturing in 2019, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. Proceeds will be used to fund UCI’s acquisition by an affiliate of the Auckland, New Zealand-based Rank Group, according to a statement distributed by Business Wire.

STATS CHIPPAC LTD., a Singapore-based provider of semiconductor test and assembly services, plans to sell $200 million of senior notes due 2016, according to an announcement on the Singapore stock exchange. Proceeds will be used to repay the company’s $234.5 million of debt outstanding under a $360 million senior term loan facility which was obtained in May, according to the announcement. Deutsche Bank AG has been hired to help manage the sale, the company said in the announcement.

BR MALLS PARTICIPACOES SA, Brazil’s biggest owner of shopping malls, plans to sell senior unsecured perpetual debt denominated in dollars, according to a person familiar with the transaction. The notes can’t be redeemed for five years, said the person, who asked not to be identified because terms aren’t set. The debt is expected to be rated BB- by Standard & Poor’s, and proceeds may be used for capital expenditures, acquisitions and debt repayment, the person said.

COMMSCOPE INC., the telecommunications equipment maker being taken private by Carlyle Group, said it plans to sell $1.5 billion of seven-year notes to help finance the buyout. CommScope also is marketing $1 billion of term loans to help pay for the transaction, according to a filing with the Securities and Exchange Commission. The Hickory, North Carolina-based company began selling a $400 million asset-backed revolving credit line that is part of the transaction in December.

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.

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 former Lockheed Martin Corp. unit once known as Enterprise Integration Group, may sell $175 million of senior subordinated notes, according to S&P. The 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.

PTT EXPLORATION & PRODUCTION PCL, Thailand’s only listed oil and gas explorer, plans to sell bonds denominated in 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.

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.

JSW STEEL LTD., India’s third-largest steelmaker, plans to sell dollar bonds to help build a 200 billion-rupee ($4.4 billion) steel and power plant in West Bengal, Chief Financial Officer Seshagiri Rao said.

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: Ashley Lutz in New York at alutz8@bloomberg.net.

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

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