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Arqiva Marketing $1.7 Billion of Debut Bonds to Refinance Loans

Arqiva Ltd. is marketing a debut issue of 1.1 billion pounds ($1.7 billion) of bonds to enable the operator of television broadcast towers in the U.K. to refinance loans taken out before the credit crisis.

The notes will be sold in pounds and dollars after the Winchester, England-based company completes investor meetings on Feb. 19., according to a person with knowledge of the deal. Arqiva is offering both investment grade and high-yield bonds.

British infrastructure companies are replacing bank loans with longer-dated bonds to take advantage of low borrowing costs. Speculative-grade company bonds issued in pounds yield 6.5 percent, just above a record low of 6.3 percent on Jan. 21, according to Bank of America Merrill Lynch’s Sterling High Yield Index.

“We are very confident of raising the junior bonds as the high-yield market is so good,” said Arqiva’s Chief Financial OfficerPhil Moses. “The long-term aim is to be entirely bond- financed, so the more we can sell now the easier our job will be in the next three to five years.”

Arqiva, whose customers include British Sky Broadcasting Group Plc and ITV Plc, is issuing the equivalent of 600 million pounds of seven-year senior notes in pounds and dollars through Arqiva Broadcast Finance Plc, the person with knowledge of the deal said.

The notes will be rated B3 by Moody’s Investors Service and be junior to the 500 million pounds of senior secured notes being sold through its Arqiva Financing No 1 Ltd. unit. Those bonds are expected to get an investment grade ranking, the person with knowledge of the deal said.

Arqiva Loans

Arqiva borrowed 3.4 billion pounds in 2007 to help finance its merger with National Grid Wireless after spinning off from NTL Inc. two years earlier. Shareholders led by Canada’s Pension Plan Investment Board and Macquarie European Infrastructure fund are injecting 867 million pounds of equity into the company to lower debt ratios, according to a person with knowledge of the arrangements.

Volkswagen Leasing GmbH plans to sell lease-backed bonds after investor meetings on Feb. 20, a person with knowledge of the deal said,

The cost of insuring PSA Peugeot Citroen’s debt against default dropped after the French carmaker reported a full-year loss narrower than forecast by analysts. Credit-default swaps on the company’s five-year bonds fell 39 basis points to 672 at 2:54 p.m. London, the fourth day of declines.

Vodafone Bid

Kabel Deutschland Holding AG’s bonds surged on reports Vodafone Group Plc is considering a bid for Germany’s largest cable company. The Munich-based company’s 6.5 percent senior notes due 2017 jumped 2.3 euro cents 108.54 cents, the highest in a month.

The Markit iTraxx Europe Index of credit-default swaps linked to 125 investment grade companies fell two basis points to 112. The Markit iTraxx Crossover Index of contracts linked to 50 companies with mostly speculative-grade ratings declined eight basis points to 435, the gauge’s lowest level in almost two weeks.

The Markit iTraxx Financial Index of swaps on 25 banks and insurers fell six basis points to 143.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point on a contract protecting 10 million euros of debt for five years is equivalent to 1,000 euros a year.

To contact the reporter on this story: Hannah Benjamin in London at hbenjamin1@bloomberg.net

Stephen Morris in London at smorris39@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net

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