LodgeNet Plans Debt as Fed Meeting Slows Sales: New Issue Alert
LodgeNet Interactive Corp., a provider of television and Internet access for hotels, is marketing debt as bond sales slowed before a Federal Reserve statement that the pace of economic recovery was sluggish.
LodgeNet plans to sell $435 million of senior secured second-lien notes due in 2016, according to a Sept. 20 filing with the U.S. Securities and Exchange Commission.
Company debt sales slowed 61 percent yesterday from Sept. 20 as the Federal Open Market Committee said yesterday that it’s willing to ease monetary policy further to spur growth though it would refrain from stepping up purchases of U.S. debt. Some investors had speculated that the Federal Reserve would say it planned to expand its holdings of securities, signaling a lack of confidence in the economic recovery.
Issuance is “kind of always a volatile thing to do when people are waiting for the Fed,” said Rajeev Sharma, a money manager at First Investors Management Co., who oversees $1.4 billion of investment-grade debt. “A lot of deals were probably just waiting to see the market reaction.”
The extra yield investors demand to own investment-grade debt instead of Treasuries was unchanged at 183 basis points yesterday, according to Bank of America Merrill Lynch’s U.S. Corporate Master index. Yields on the bonds fell 9 basis points to 3.73 percent, the lowest since daily records began on Oct. 31, 1986, the data show. A basis point is 0.01 percentage point.
Corporate bond sales have surged to at least $105.1 billion this month, a 16 percent increase from the similar period in August, which was the busiest for that month on record, according to data compiled by Bloomberg. Companies issued $4.55 billion of debt yesterday, Bloomberg data show.
‘New Issuance to Continue’
“I do expect new issuance to continue until the blackout period for earnings,” Sharma said, referring to the time preceding company results.
Valeant Pharmaceuticals International, the U.S. company merging with Biovail Corp., Canada’s largest publicly traded drugmaker, led $2.95 billion of high-yield, high-risk bond sales yesterday, Bloomberg data show. High-yield debt is rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s.
Spreads on junk debt rose 7 basis point to 632 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Yields fell 2 basis points, to 8.13 percent.
Investment-grade companies issued $1.6 billion of debt, Bloomberg data show.
LodgeNet’s debt may be issued later this week, according to a person familiar with the offering, who declined to be identified because terms aren’t set.
The following is a description of at least $11 billion of pending sales of dollar-denominated bonds in the U.S.
BURGAN BANK, the lender part-owned by Kuwait Projects Co., plans to sell 10-year lower Tier 2 bonds in dollars, according to three people with knowledge of the sale. The notes may yield in the 8 percent range, the people said. The bank may sell $300 million to $500 million of bonds, two of the people said. JPMorgan Chase & Co., Morgan Stanley and Standard Chartered Plc are managing the sale.
GERDAU SA, Latin America’s largest steelmaker, hired HSBC Holdings Plc, Banco Santander SA and JPMorgan Chase & Co. to sell benchmark bonds overseas, according to a person familiar with the transaction who declined to be identified because the terms aren’t set. Proceeds will be used to refinance debt, the company said Sept. 16 in a regulatory filing. A benchmark sale is typically at least $500 million.
TRANSPOWER NEW ZEALAND LTD., which operates New Zealand’s electricity grid, started marketing at least $150 million of bonds to U.S. private investors, according to a person familiar with the plan. National Australia Bank Ltd. and Citigroup Inc. are managing the sale, the person said, asking not to be named as the details are private.
DOHA BANK QSC, Qatar’s third-largest bank, may raise as much as $1 billion from bond sales, its chief executive officer said. The debt is likely to be 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 will sell the bonds in dollars and the local riyal currency, the CEO said in a July 25 interview.
STERICYCLE INC. plans to issue $175 million of seven-year, 3.89 percent notes and $225 million of 10-year, 4.47 percent debt after receiving informal commitments from 22 institutional investors to buy the securities, it said in a statement distributed by Business Wire.
CHINA MEDICAL TECHNOLOGIES INC., which makes devices for tumor treatments, plans to sell as much as $200 million of five- year senior notes denominated in dollars, the company said in a statement distributed by PR Newswire. Proceeds will be used to buy back convertible notes due in 2011 and 2013, Fitch Ratings said in a statement. Deutsche Bank AG and Standard Chartered Plc will help the Beijing-based company arrange meetings with investors in Hong Kong, Singapore, London and the U.S., said a person familiar with the transaction who asked not to be identified because terms aren’t set.
EXOPACK HOLDING CORP., a designer and manufacturer of paper and plastic film packaging, plans to sell $100 million of 11.25 percent senior notes due 2014, the company said in a statement distributed by Business Wire.
RHODIA SA, the French maker of plastics and perfume ingredients, may sell $400 million of 10-year notes to extend maturities, the company said in an e-mailed statement. The notes may be sold at a yield of about 7 percent, according to a person familiar with the offering who declined to be identified because terms aren’t set. Proceeds will be used to redeem some of Rhodia’s outstanding floating-rate notes maturing in 2013, the Paris-based company said in the statement.
CHC HELICOPTER CORP., the provider of flights to offshore rigs and platforms purchased by First Reserve Corp. in 2008, plans to sell $1.1 billion of 10-year notes denominated in U.S. dollars, according to a person familiar with the transaction. The debt may yield 9.25 percent to 9.5 percent, said the person, who declined to be identified because terms aren’t set. Proceeds may be used to repay bank borrowings and for breakage fees on interest-rate swap agreements, the person said.
LODGENET INTERACTIVE CORP. plans to sell $435 million of six-year notes, according to a filing with the Securities and Exchange Commission.
VERTELLUS SPECIALTIES INC. plans to sell $325 million of five-year notes, according to a person familiar with the offering. Proceeds may be used to repay bank debt, said the person, who declined to be identified because terms aren’t set.
STONERIDGE INC. plans to sell $175 million of seven-year notes, according to a statement distributed by PR Newswire. Proceeds will be used to buy back the Warren, Ohio-based company’s 11.5 percent notes due 2012, it said in the statement.
HARVEST OPERATIONS CORP., a unit of Harvest Energy Trust, may sell $500 million of seven-year notes, according to a person familiar with the offering. Proceeds may be used to repay debt and for general corporate purposes, said the person, who declined to be identified because terms aren’t set. The notes may be sold as soon as Sept. 27, the person said.
YASAR HOLDING AS, a Turkish company that makes dairy and meat products, paint and paper, plans to sell five-year notes denominated in U.S. dollars, said a person familiar with the matter. Barclays Plc is managing the sale, which will be used to fund a senior loan to Yasar from Barclays Bank Plc, said the person, who asked not to be identified because the details are private.
EVERTEC INC., the processing unit of Popular Inc., a Hato Rey, Puerto Rico-based bank holding company, plans to sell $220 million of seven-year notes, according to a person familiar with the offering. Proceeds will help pay for the acquisition of 51 percent of the company by Apollo Management LP, said the person, who declined to be identified because terms aren’t set.
LIBERTY TIRE RECYCLING plans to sell $200 million of six- year notes, according to a person familiar with the offering. Proceeds may be used to repay bank debt and for general corporate purposes, said the person, who declined to be identified because terms aren’t set.
WEST CORP., the call-center operator taken private by Thomas H. Lee Partners LP and Quadrangle Group LLC in 2006, plans to sell $500 million of notes due 2018 to repay bank debt, according to Standard & Poor’s. S&P assigned the debt a grade of B, the credit rater said in a statement. Moody’s Investors Service ranked the notes B3, on step lower, it said in a separate statement.
TITAN INTERNATIONAL INC., the maker of tires and wheels for off-highway vehicles, plans to sell $175 million of senior secured notes due 2017, it said in a Sept. 15 statement distributed by Business Wire. The Quincy, Illinois-based company plans to buy back up to $139.9 million of notes maturing in 2012, it said in a separate statement. The company withdrew a proposed $150 million offering announced in May because of adverse market conditions, Chief Financial Officer Paul Reitz said in a telephone interview.
DINEEQUITY INC., the owner of Applebee’s Neighborhood Grill & Bar and the IHOP pancake chain, plans to sell senior unsecured notes, the company said in a statement distributed by Marketwire. Proceeds may be used to help fund tender offers for “certain series of its subsidiaries’ outstanding securitization notes,” the Glendale, California-based company said in the statement.
REYNOLDS GROUP HOLDINGS LTD., the maker of Reynolds Wrap aluminum foil, may sell $2 billion of senior secured notes and $1.5 billion of senior unsecured notes to help pay for its purchase of Pactiv Corp., according to a person familiar with the transaction who declined to be identified because terms aren’t set. Reynolds Group is also seeking $1.5 billion in loans to pay for the acquisition, the person said.
NBTY INC., the maker of Nature’s Bounty and MET-Rx nutritional supplements, may issue $650 million of bonds that yield 9 percent to 9.25 percent to help pay for its acquisition by Carlyle Group, according to a person familiar with the transaction who declined to be identified because terms aren’t set. The company earlier marketed $900 million of the debt, the person said.
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. Moody’s Investors Service ranked the proposed notes at Ba2, citing growing personal consumption in China, E- Land Fashion’s moderate scale and significant business volatility. Proceeds will be used mainly for capital expenditures and general corporate purposes, Moody’s said in the report.
Offerings in Pipeline
SYDNEY AIRPORTS CORP. hired Bank of America Merrill Lynch, JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc to arrange debt investor meetings in Asia and the U.S., according to a person familiar with the matter.
AEGIS LTD., an outsourcing unit of Essar Group, may sell the first non-convertible dollar bonds from an Indian information technology company. The company, which bought PeopleSupport Inc. in 2008, may sell its bonds as part of a financing package that would include a loan of as much as $350 million to consolidate debt, Chief Financial Officer C.M. Sharma said. The money would go to fund expansion
AMERICAN INTERNATIONAL GROUP INC., the insurer that’s majority owned by the U.S., may sell bonds to help repay its government bailout, it said in an Aug. 9 registration statement filed with the Securities and Exchange Commission.
GATX CORP., a Chicago-based company that leases railroad cars and other equipment, filed a shelf registration with the Securities and Exchange Commission to sell debt securities and pass-through certificates. The debt securities may be senior or subordinated, according to the filing.
JSW STEEL LTD, India’s third-largest steelmaker, plans to sell dollar bonds for the first time in three years and as rupee-denominated finance costs rise. JSW has applied for credit ratings before a possible offshore bond sale to help build a 200 billion rupee ($4.3 billion) steel and power plant in West Bengal, Chief Financial Officer Seshagiri Rao said.
ARGENTINA may sell $1 billion of bonds due in 2017, El Cronista newspaper reported, without saying how it obtained the information. The government is also planning to offer an exchange for dollar bonds due in 2011 and 2012, the Buenos Aires-based publication said.
RURAL ELECTRIFICATION CORP., India’s state-owned lender to power projects, may sell as much as $300 million of bonds in U.S. dollars, Finance Director Hari Das Khunteta said in a telephone interview. Rural Electrification plans to raise $500 million from debt sales in the year ending March 31, he had said on April 16.
CZECH REPUBLIC plans to sell as much as $2 billion of dollar bonds to diversify from koruna and euro debt, Eduard Janota, former finance minister, said in an interview for Mlada Fronta Dnes newspaper.
POTASH CORPORATION OF SASKATCHEWAN INC., the world’s largest fertilizer company by capacity, filed a registration statement with the U.S. Securities and Exchange Commission for $2 billion of debt securities.
INDONESIA plans to name three banks to help it sell about $650 million of Islamic bonds, Dahlan Siamat, director for Islamic financing at the finance ministry, said in a telephone interview in Jakarta. The government sold its first international Islamic dollar bonds in April 2009.
SRI LANKA hired HSBC, Bank of America Merrill Lynch and Royal Bank of Scotland to sell $1 billion of bonds, the Central Bank of Sri Lanka said on its website on Aug. 12.
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 currency and the Jordanian dinar is pegged to it,” Abu Hammour said.
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 Latin Finance conference in London. The dollar-denominated bonds may have a maturity of 20 years or more, Steneri said.
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 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 billion from a Shariah-compliant dollar bond on May 27. Malaysia is rated A3 by Moody’s and A- by S&P.
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 was considering a “no-deal roadshow” to gauge international investors’ appetite, Kwetey said in a May 26 interview in Abidjan. Ghana sold its first global bond in 2007, raising $750 million to help fund the construction of roads and power plants.
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 S&P and Fitch, four levels below investment grade. Moody’s assigned an equivalent ranking of B1.
MONGOLIA plans to raise $500 million selling bonds in 2010 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 after Europe’s debt crisis drove up borrowing costs. Investment banks are advising Mongolia to issue debt with maturities of 5 years to 10 years, Finance Minister Sangajav Bayartsogt said in a Feb. 9 interview. The securities may yield 8 percent to 11 percent, he said.
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