Exide Plans Notes as Spreads Poised to Shrink: New Issue Alert
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Exide Technologies, a producer of lead-acid batteries, plans to sell high-yield, high-risk bonds as the extra yield investors demand to own the debt tighten.
Exide Technologies may issue $675 million of seven-year notes and will use proceeds to refinance bank loans and buy back bonds maturing in March 2013, according to a statement distributed by Globe Newswire. Moody’s Investors Service assigned the securities a rank of B2 and Standard & Poor’s graded them an equivalent B, the ratings companies said in separate statements.
Relative yields on speculative-grade corporate bonds may shrink to 360 basis points by the end of this year as defaults plunge, Bank of America Merrill Lynch analysts Oleg Melentyev and Mike Cho wrote Jan. 10 in a note to clients. That compares with 522 basis points yesterday, Bank of America Merrill Lynch index data show.
The default rate on high-yield bonds will fall to 2 percent by the end of this year, Melentyev and Cho wrote. Moody’s forecasts defaults will decline to 1.9 percent this year, according to a Jan. 7 statement. S&P estimates the rate will drop to 2.4 percent in September.
Spreads on high-yield bonds tightened 6 basis points yesterday while yields fell 2 basis points to 7.68 percent, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. Junk bond spreads contracted 98 basis points last year, the index data show.
High-yield bonds are rated below Baa3 by Moody’s and less than BBB- by S&P. A basis point is 0.01 percentage point.
NRG Energy Inc., the Princeton, New Jersey-based power producer, sold $1.2 billion of notes to lead $4.64 billion of junk bond sales yesterday, according to data compiled by Bloomberg. It marked the busiest day for junk offerings since $5.17 billion sold on Nov. 10, Bloomberg data show.
Investment-grade corporate bond spreads narrowed 1 basis point to 163 basis points, according to the Bank of America Merrill Lynch U.S. Corporate Master index. Yields on the debt rose 2 basis points to 4.08 percent, the index data show.
Sweden’s Nordea AB sold $2.75 billion of notes in a three- part offering as investment-grade borrowers issued $7.75 billion of bonds yesterday, Bloomberg data show.
The following is a description of at least $7.46 billion of pending sales of dollar-denominated bonds in the U.S.
CENCOSUD SA, Chile’s largest retailer by sales, plans to sell 10-year dollar-denominated debt in a benchmark offering, according to a person familiar with the transaction. Deutsche Bank AG, JPMorgan Chase & Co. and Banco Santander SA are managing the sale, said the person, who asked not to be identified because terms aren’t set. Benchmark sales are typically at least $500 million.
HYUNDAI MOTOR CO., the fastest-growing mass-market automaker in the U.S. last year, may issue notes through a finance unit, according to a person familiar with the transaction. The debt, to be offered through Hyundai Capital America, may be rated Baa2 by Moody’s Investors Service, said the person, who declined to be identified because terms aren’t set.
NOMURA HOLDINGS INC., Japan’s biggest brokerage, may issue five-year dollar-denominated debt in benchmark size as soon as this week, according to a person familiar with the transaction. The notes may be rated Baa2 by Moody’s Investors Service and BBB+ by Standard & Poor’s, said the person, who declined to be identified because terms aren’t set.
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.
ACE CASH EXPRESS INC. said it plans to offer $350 million of debt to help pay for a tender offer for its 10.25 percent senior notes due in 2014, the company said in a statement distributed by PR Newswire. ACE Cash Express is the largest owner and operator of check cashing stores in the U.S., according to the statement.
MGM RESORTS INTERNATIONAL, the biggest casino owner on the Las Vegas Strip, plans to sell $1.1 billion of senior secured notes to refinance debt of its CityCenter Holdings LLC joint venture with Dubai World, the company said in a statement distributed by PR Newswire. MGM Resorts may issue $500 million of five-year, first-lien notes as well as $600 million of six- year, second-lien securities that can pay interest in cash or additional debt, according to a person familiar with the offering.
GRIFOLS SA, Europe’s largest maker of blood-plasma products, plans to sell $1.1 billion of debt maturing in 2018 as soon as this week, according to a person familiar with the offering. Proceeds will be used to fund the company’s acquisition of Talecris Biotherapeutics Holdings Corp., said the person, who declined to be identified because terms aren’t set.
EXIDE TECHNOLOGIES INC., a producer of lead-acid batteries, will sell seven-year senior notes in a $675 million offering, the company said in a statement today. Proceeds will be used to repay debt under a term-loan facility and to fund a tender offer for its 10.5 percent notes due March 2013, according to the statement.
POLYMER GROUP INC., the chemical company majority-owned by MatlinPatterson Global Advisors LLC, plans to sell $530 million of senior secured notes maturing in 2019, according to a statement distributed by PRNewswire. The notes may be priced at the end of the week, according to a person familiar with the offering, who declined to be identified because the terms aren’t set. Proceeds will be used to finance the Charlotte, North Carolina-based company’s acquisition by Blackstone Group LP, the statement said.
HOPSON DEVELOPMENT HOLDINGS LTD., a Hong Kong-based real estate developer, plans to start marketing a proposed sale of U.S. dollar-denominated senior notes, according to a statement from the company to the Hong Kong stock exchange. UBS AG is the lead manager of the issue, the statement said.
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.
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.
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
PT SULFINDO ADIUSAHA, an Indonesian company which makes chlorine and chemicals, hired Barclays Plc and Standard Chartered Plc to help it sell five-year, fixed-rate dollar bonds, according to a person familiar with the matter.
INKIA ENERGY, a unit of Israel Corp., may sell bonds in the U.S. to finance expansion of its electricity generation business, according to a spokesman for the holding company. The company plans to raise $250 million from the sale and is in discussions with several foreign banks, Calcalist reported Jan. 9, without saying where it obtained the information.
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.
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