EnergySolutions Plans Debt as Spreads Tighten: New Issue Alert

EnergySolutions Inc., the nuclear-services company, is marketing debt as spreads on high-yield, high-risk debt reach their tightest in two months.

EnergySolutions may sell senior notes, the company said July 13 in a statement distributed by Marketwire. Moody’s Investors Service rated the proposed senior unsecured notes B3, according to a report published July 19. The extra yield investors demand to own speculative-grade debt instead of Treasuries fell to 659 basis points on July 23, the lowest since May 19, according to the Bank of America Merrill Lynch U.S. High Yield Master II.

The junk-rated sale comes as high-yield volume reached $5.2 billion last week, a 57 percent increase over the prior week. Christopher Garman, president of Orinda, California-based Garman Research LLC, attributed the surge in junk volume to a “pick-up” in secondary demand that drew issuers to market.

“The bid for high-yield has been very solid,” Garman said. “The high-yield bond market is a lower-risk alternative for investors worried about top-line growth in a sluggish economic atmosphere.”

Junk debt spreads narrowed 18 basis points last week, the index data show. Absolute yields on speculative grade debt fell 14 basis points to 8.65 percent on July 23.

High-yield bonds have returned 2.7 percent this month including reinvested interest, outperforming investment-grade debt which returned 1 percent. Junk bonds are rated below Baa3 by Moody’s Investors Service and BBB by S&P. A basis point is 0.01 percentage point.

‘Rocky and Volatile’

Total corporate bond sales reached $23 billion last week, bringing July’s total issuance to $67.6 billion, a 25.4 percent increase over the similar period in June. Garman expects volume will maintain its recent level ahead of September and October, which he says can be “rocky and volatile months.”

Investment-grade yields dropped 1 basis point to 4.16 percent last week, after touching 4.11 percent, the lowest since March 2004, according to Bank of America Merrill Lynch’s U.S. Corporate Master index. Investment-grade spreads narrowed 5 basis points to 193 basis points, the index data show.

Standard & Poor’s assigned a BB- rating to Salt Lake City- based EnergySolutions’s notes, which mature in 2018, citing the “aggressive financial risk profile” and operational risks in A July 15 report. James T Siahaan, the primary credit analyst on the report, couldn’t immediately be reached for comment.

‘Modestly, Yet Steadily’

Moody’s analysts Paul Aran and Michael J. Mulvaney, both based in New York who wrote their company’s credit opinion, gave the rating a stable outlook on “weakened pro-forma credit metrics and the expectation that leverage and other credit metrics will improve modestly, yet steadily over the intermediate term.”

“Essentially, they’re changing their capital structure around” to include some bond debt, Aran said in an interview. “They seem to be an important player in the market so we’re not expecting them to lose any market share over the intermediate term.”

Following is a description of at least $3.52 billion of pending sales of dollar-denominated bonds in the U.S.

Investment Grade

CAISSE D’AMORTISSEMENT DE LA DETTE SOCIALE, the state agency charged with funding France’s social security debt, plans to sell three-year bonds in dollars that may be priced to yield 28 basis points more than the benchmark mid-swap rate, according to a banker involved in the transaction. JPMorgan Chase & Co.,

NOMURA HOLDINGS INC. Japan’s largest brokerage, plans to sell dollar-denominated sukuk, or Islamic bonds, in Malaysia, according to a July 6 company statement. Nomura may sell $100 million of Ijarah sukuk that will mature in 2012. The securities will yield 160 basis points more than the London interbank offered rate, said Jamelah Jamaluddin, chief executive officer of Kuwait Finance House (Malaysia) Bhd., a unit of Kuwait’s

CHILE hired JPMorgan Chase & Co, Citigroup Inc. and HSBC Holdings Plc to arrange the country’s first international bond sale in six years, Finance Minister Felipe Larrain said. Chile will use proceeds of the 10-year bonds to help finance rebuilding after a February earthquake, Larrain said. The government plans to sell $1 billion of the securities in dollars and $500 million “denominated in pesos,” Larrain said. Moody’s upgraded Chile to Aa3 from A1 on June 16, citing “economic and

DOHA BANK QSC, Qatar’s third-largest bank, may raise as much as $1 billion from bond sales, its chief executive officer said. The money is likely to be raised for five years and is meant to “fix the maturity mismatch” on the bank’s balance sheet, Raghavan Seetharaman said in a June 16 telephone interview from Doha. The bank hasn’t decided which currency to sell the bonds in, he said. The lender said in April that it

FORETHOUGHT FINANCIAL GROUP INC. plans to sell $150 million of 10-year bonds, according to a person familiar with the transaction, who declined to be identified because terms aren’t

Not Rated

The PROVINCE OF CORDOBA, Argentina, plans to sell as much as $350 million of bonds in international markets once the

SENSIENT TECHNOLOGIES CORP. said it entered into an agreement with a group of four financial institutions for the issuance of $110 million in fixed-rate, senior notes, according to a Nov. 19 statement distributed by Business Wire. The company

High Yield

TRILOGY INTERNATIONAL PARTNERS LLC, the wireless communications provider, plans to sell $370 million of senior secured notes, according to Moody’s Investors Service. Moody’s rated the notes Caa1, it said in a report. Proceeds will be used

VANTAGE DRILLING CO. may sell $960 million of five-year debt to help pay for its acquisition of Mandarin Drilling Co. and to finance the completion of a ultra-deepwater drilling vessel, according to a person familiar with the transaction. The

AIR CANADA, the country’s largest airline, plans to sell $900 million of senior secured notes due 2015 to be issued in U.S. dollars and Canadian dollars, the company announced in a statement distributed through CNW Telbec. Air Canada intends to use some of the proceeds to repay debt under its July 2009

E-LAND FASHION CHINA HOLDINGS LTD, the Hong Kong-based apparel products provider, hired Morgan Stanley to help it sell $200 million of three-year bonds, according to a person familiar with the matter. The company plans to begin meeting with investors in Asia, Europe and the U.S. on July 19, said the person who declined to be identified because terms aren’t set. Moody’s Investors Service assigned the proposed notes a Ba2, citing growing personal consumption in China, E-Land Fashion’s moderate scale and significant business volatility. Proceeds

ENERGYSOLUTIONS INC., the Salt Lake City-based nuclear services company, has amended its credit facility and plans to refinance that debt with borrowings under new loans and an offering of senior notes, the company said July 13 in a statement distributed by Marketwire. Standard & Poor’s assigned

GENTIVA HEALTH SERVICES INC., the U.S. home-nursing company that is buying Odyssey HealthCare Inc., plans to sell $305 million of eight-year notes, the Atlanta-based company said in a May 24 regulatory filing, without specifying the timing of the transaction. Proceeds will be used to help fund the takeover, according to the filing. Standard & Poor’s assigned the unsecured notes a B- credit rating on June 29. Moody’s

UNIVERSAL HEALTH SERVICES INC., the operator of more than 100 U.S. medical facilities that’s buying Psychiatric Solutions Inc., plans to sell $400 million of senior unsecured debt to

PROMSVYAZBANK OJSC, Russia’s third-largest private bank, plans to sell $200 million of six-year loan participation notes

TITAN INTERNATIONAL INC., the maker of tire and wheel systems for off-highway equipment, said it plans to sell at least $150 million of senior unsecured notes. Proceeds will be used to repurchase the 8 percent senior unsecured notes due in 2012 and for general corporate purposes, the Quincy, Illinois-

INVENTIV HEALTH INC., the provider of sales and marketing services to science companies that is being acquired by Thomas H. Lee Partners, may sell $275 million of senior notes to back the purchase, it said in a regulatory filing. Standard & Poor’s

Offerings in Pipeline

BANCO BMG S.A., a Brazilian lender specializing in loans to state retirees and workers, plans to sell 10-year bonds in dollars, according to a person familiar with the offering. The Belo Horizonte-based bank hired Banco Bradesco SA, BCP Securities, Morgan Stanley and Banco Santander SA to arrange the

IDBI BANK LTD., an Indian state-owned lender, is considering a sale of bonds denominated in U.S. dollars to raise about $500 million, Executive Director Melwyn Rego said in an interview on July 21. HSBC Holdings Plc and Barclays Plc have been hired to oversee the bank’s medium-term note program, Rego said. BNP Paribas SA, Royal Bank of Scotland Group Plc and Standard Chartered Plc will help manage this sale of benchmark

BELARUS plans to sell five-year bonds in dollars, according to two people with knowledge of the sale. BNP Paribas SA,

CZECH REPUBLIC plans to sell as much as $2 billion of dollar bonds to diversify from koruna and euro debt, Eduard

POTASH CORPORATION OF SASKATCHEWAN INC., the world’s largest fertilizer company by capacity, filed a registration

INDONESIA plans to name three banks to help it sell approximately $650 million of Islamic bonds in October, Dahlan Siamat, director for Islamic financing at the finance ministry,

OAO GAZPROMBANK, the lending unit of Russia’s gas export monopoly, hired Barclays Capital, Royal Bank of Scotland Group Plc, and UBS AG to organize meetings with investors in Europe

CORPORACION FINANCIERA DE DESAROLLO SA Peru’s state development bank known as Cofide, plans to sell as much as $250 million of dollar-denominated bonds, according to Chief Financial Officer Carlos Linares. Linares said in an interview in Lima, that the lender is selling long-term debt as it boosts lending to local infrastructure projects. “Peru’s need for infrastructure is huge,” Linares said. “The government is

SRI LANKA plans to sell dollar-denominated bonds, according to its central bank. The South Asian country’s third-ever overseas offering is likely after August, Central Bank of Sri

GEORGIAN RAILWAY LTD. plans to sell five-year bonds in dollars that may be priced to yield about 10 percent, according to two people with knowledge of the sale. The company hired Bank

JORDAN plans to sell about $500 million of bonds, Finance Minister Mohammad Abu Hammour said in an interview on June 23. The sale will be denominated in U.S. dollars “as it’s a stable

URUGUAY may sell as much as $1 billion of bonds in 2011, including $500 million of dollar-denominated debt, Carlos Steneri, director of public credit at Uruguay’s Ministry of Economy and Finance, said June 3 at a LatinFinance conference in

MALAYSIA plans to raise about $1 billion from its first sale of conventional dollar bonds in eight years after drawing bids for five times the Islamic debt it offered, a finance ministry official said. The government may hire the same banks, including CIMB Group Holdings Bhd. and HSBC Holdings Plc, to arrange the sale by Sept. 30, said the official, who declined to be named as the discussions are private. Malaysia raised $1.25

SABIC CAPITAL, a unit of Saudi Basic Industries Corp., will sell bonds when market conditions and rates are favorable, its vice president for corporate finance Mutlaq al-Morished told al-Arabiya television in Dubai on June 16. Sabic delayed a bond sale because of unfavorable spreads, al-Morished said in a May 26 telephone interview. Sabic Capital had hired HSBC Holdings

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 is considering a “no-deal roadshow” as early as the fourth quarter to gauge international investors’ appetite, Kwetey said in a May 26 interview in Abidjan. Ghana sold its first global bond in 2007,

ANGOLA received credit ratings from Moody’s, S&P, and Fitch Ratings that put it on par with Nigeria, Lebanon and Belarus, and paved the way for a planned sale of international bonds. The southern African nation’s creditworthiness was rated at B+ by

EURASIAN NATURAL RESOURCES CORP., a London-based iron ore and alumina producer with operations in China and Russia, said it delayed its first dollar bond sale. The company is “postponing meetings with investors regarding a potential bond issuance under its Euro Medium Term Note program until further notice,” Charlotte Kirkham, a spokeswoman for ENRC, said in an e-mail. The company had hired Deutsche Bank AG and Morgan

CHINA ORIENTAL GROUP CO. plans to sell senior notes to provide working capital and possibly to finance the purchase of steel mills and iron ore assets in China. Deutsche Bank AG will

BANK FOR INVESTMENT & DEVELOPMENT OF VIETNAM received approval from the central bank to issue 7 trillion dong ($369 million) of notes and another 3 trillion dong of dollar-

BOLIVIA plans its first international bond sale in more

POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORP. of the Philippines may sell between $750 million and $1.5 billion of dollar-denominated bonds “anytime” to help refinance maturing debt through next year, Vice Chairman Jose Ibazeta said. The

BRISBANE AIRPORT CORP., owner of Australia’s third-busiest airport, may sell bonds in the U.S. later this year as it pursues new markets to help refinance debt and pay for a new runway. The company is considering a 10- or 15-year U.S. private placement and a five- to seven-year Australian dollar bond sale

VIETNAM NATIONAL COAL-MINERAL INDUSTRIES GROUP, the state-owned coal producer known as Vinacomin, plans to sell as much as $500 million of bonds overseas this year to fund mining and

FINLAND may sell five-year bonds denominated in dollars

MONGOLIA plans to raise $500 million selling bonds this year 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 this year after Europe’s debt crisis drove up borrowing costs. Investment banks are advising Mongolia to issue debt with maturities of 5

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