Heinz Seeks $12 Billion in Loans; NBTY Returns for Rate Cut

H.J. Heinz Co. (HNZ) gave guidance on the rate it will pay on $12 billion of loans to support the ketchup maker’s $23 billion buyout by Warren Buffett’s Berkshire Hathaway Inc. and 3G Capital Inc. NBTY Inc. is seeking to reduce borrowing costs on a loan after a failed attempt to refinance the debt last month.

Heinz will pay interest at 2.75 percentage points or 3 percentage points more than the London interbank offered rate with a 1 percent minimum on the lending benchmark on an $8.5 billion term loan, which will be split into a six-year B-1 portion and a seven-year B-2 slice, according to a person with knowledge of the deal who asked not to be identified because terms are private.

NBTY, the Carlyle Group LP-controlled maker of nutritional supplements, is seeking to cut borrowing costs on a $1.51 billion term loan to 2.5 percentage points more than Libor from 3.25 percentage points, according to another person with knowledge of the matter, who asked not to be identified because it’s private.

Earnings, robust market conditions and a low default rate have supported loan and bond issuance this year, which stood at $245 billion as of March 8, according to a JPMorgan Chase & Co. report.

“While we continue to find both high-yield bonds and loans attractive for the balance of 2013 given positive fundamentals and relatively attractive spreads, the near-term bias has probably shifted slightly in favor of loans,” analysts led by Peter Acciavatti wrote in the report.

Vedanta Loans

Oil and metals producer Vedanta Resources Plc. (VED), controlled by Indian billionaire Anil Agarwal, is seeking $3.5 billion of loans, including $2.5 billion from U.S. non-bank lenders, to refinance debt.

The Heinz transaction includes as much as $1.4 billion in loans denominated in euros and $600 million in pounds, the person said. The debt will be split into six-year and seven-year portions and will pay interest at 3 percentage points or 3.25 percentage points more than Libor, with a 1 percent minimum, the person said.

Blackstone Group LP (BX) tripled a credit line to $2.1 billion from $600 million to buy single-family homes, according to a person with knowledge of the matter. Deutsche Bank AG is leading the transaction for the manager of the largest real estate private-equity fund, which has invested $3.5 billion to buy 20,000 single-family rental homes since last year.

Clearstream Deal

Clearstream Banking SA, part of the financial-settlement company owned by Deutsche Boerse AG, is replacing a 750 million euro ($972 million) credit line, according to two people with knowledge of the matter. The three-year facility is being arranged by Commerzbank AG and BNP Paribas SA.

Aircraft and spacecraft component maker Ducommun Inc. (DCO) is seeking to reduce the rate on $222.6 million of loans to 3.25 percentage points more than Libor, with a 1 percent floor, from 4.25 percentage points more than the lending benchmark, with a 1.25 percent minimum, according to a person with knowledge of the deal. UBS AG is arranging the transaction.

Alere Inc. (ALR), a provider of health-management services, is seeking to cut the rate on a $1.36 billion term loan to 3.25 percentage points more than Libor with a 1 percent minimum, according to a person familiar with the deal.

Jed Kelly, New York-based cohead of syndicated loan sales at Credit Suisse Group AG, resigned, according to people familiar with the matter. Wall Street firms have been losing traders and salespeople from their fixed-income businesses as new capital requirements and other regulations limit profitability and reduce pay.

The price of leveraged loans climbed to 98.14 cents on the dollar today, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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