July 18 (Bloomberg) -- The cost to guard against losses on the debt of Olin Corp. surged 74.3 basis points after the chemical and ammunition manufacturer said it had agreed to buy K.A. Steel Chemicals Inc.
Credit-default swaps tied to Olin climbed to 234.7 basis points at 5:07 p.m. in New York, up from 160.4 basis points yesterday, according to data provider CMA which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. That’s about the highest since the contracts rose to 241.7 basis points in October 2011, according to data compiled by Bloomberg.
Olin agreed to buy K.A. Steel for $328 million in cash and plans to issue senior notes to finance a portion of the acquisition, the Clayton, Missouri-based company said in a statement today. Olin has $286 million of senior unsecured bonds outstanding, according to data compiled by Bloomberg.
Olin expects the purchase to be “immediately accretive” to earnings and cash flow, Chief Executive Officer and Chairman Joseph Rupp said in the statement.
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