Odebrecht, Yankee Candle Said to Cancel Bonds as Yields Jump

Odebrecht SA, the Salvador, Brazil-based construction and engineering firm, postponed an offering of benchmark bonds and Yankee Candle Co. Inc. terminated a $450 million deal as yields in the U.S. reached a 10-month high.

The Odebrecht transaction was delayed by market conditions, according to a person with knowledge of the deal, who asked not to be identified citing lack of authorization to speak publicly. The company, through its Odebrecht Offshore Drilling Finance Ltd. unit, proposed $1.9 billion of secured bonds due October 2022 that were preliminarily rated BBB by Standard & Poor’s, according to a June 11 report.

Yankee Candle terminated its offering of five-year notes, rated Caa1 by Moody’s Investors Service, and rescinded its offer to redeem its notes due 2016 and 2017, the South Deerfield, Massachusetts-based company said today in a statement. Proceeds from the bond sale and from a new term loan were intended to be used on the redemption, to pay a $187 million shareholder dividend and to refinance an existing term loan, the company said yesterday. The new term loan was also canceled, according to a person with knowledge of the transaction, who asked not to be identified citing lack of authorization to speak publicly.

Yields Surge

Yields on bonds from the riskiest to the most creditworthy borrowers in the U.S. reached 3.91 percent yesterday, the highest since August, and up from a record-low 3.35 percent on May 2, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield index.

Odebrecht “did not cancel any existing bonds that were already trading,” the company’s press office said in an e-mailed statement. Odebrecht still intends to raise funds “and is waiting for the market to stabilize,” the statement said.

A message left with Yankee Candle spokeswoman Karen Woods wasn’t immediately returned.

Yields on dollar-denominated debt from borrowers in developing countries climbed to 5.02 percent yesterday, the highest since July, after reaching an unprecedented low of 4.04 percent Jan. 24, according to the Bank of America Merrill Lynch U.S. Emerging Markets External Debt Sovereign & Corporate Plus Index.

Warren Resources Inc. (WRES), the New York-based oil and natural gas company, postponed its debut issue of $200 million of eight-year bonds earlier this week, on the heels of similar moves by Petrofac Ltd. (PFC), ZAO Russian Standard Bank and China International Marine Containers Co. (2039) during the last four weeks.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net

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

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