Altria Bond Sale for Tender Leads $8.3 Billion of Issues in U.S.

Altria Group Inc., the largest cigarette maker in the U.S., led borrowers selling or planning to issue at least $8.3 billion of dollar-denominated bonds today as it raised $3.2 billion to help fund a tender offer.

The owner of Philip Morris USA Inc. sold $1.4 billion of 4 percent, 10-year notes to yield 155 basis points more than similar-maturity Treasuries and $1.8 billion of 5.375 percent, 30-year securities at a relative yield of 175 basis points, according to data compiled by Bloomberg. The bonds are expected to be rated Baa1 by Moody’s Investors Service.

Proceeds will be used for purposes including the repurchase of as much as $2 billion of notes in a tender offer that the Richmond, Virginia-based company announced today. Altria plans to buy back debt across four issues that pay coupons from 9.25 percent to 10.2 percent and mature from 2018 to 2039.

The company last sold debt in April, issuing $1 billion in two parts including $350 million of 2.95 percent debentures due May 2023 at a relative yield of 130 basis points, Bloomberg data show. The bonds traded at 93.27 cents on the dollar to yield 3.8 percent on Oct. 25, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Other borrowers in the market today included Italian lender Intesa Sanpaolo SpA, which sold $1.25 billion of 3.875 percent, five-year securities at a 260 basis-point spread, Bloomberg data show.

J. Crew Group Inc. sold $500 million of payment-in-kind bonds that may yield 7.75 percent, according to a person with knowledge of the transaction who asked not to be identified because terms weren’t set. The 5.5-year PIK bonds will be used to fund a payout to the retailer’s owners, including private-equity firm TPG Capital.

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