MGM Resorts International, the
biggest casino owner on the Las Vegas Strip, plans to sell $1.1
billion of senior secured notes as high-yield bonds outperform
investment-grade debt for a second consecutive month.
The company plans to sell $500 million of five-year, first-
lien notes as well as $600 million of six-year, second-lien
securities that can pay interest either in cash or in the form
of additional debt, according to a person familiar with the
offering. The sale may occur as soon as this week, said the
person, who declined to be identified because terms aren’t set.
Companies are planning at least $6.23 billion of
speculative-grade debt offerings that may sell as early as this
week, up from about $675 million at the end of last year,
according to data compiled by Bloomberg. The increase comes as
junk-rated bonds returned 0.87 percent this month through
yesterday, compared with 0.1 percent for investment-grade debt,
according to Bank of America Merrill Lynch indexes.
The extra yield investors demand to own high-yield, high-
risk bonds instead of Treasuries has narrowed 13 basis points
since Dec. 31 to 528 basis points, or 5.28 percent, according to
the Bank of America Merrill Lynch U.S. High Yield Master II
index. The spread reached as low as 511 basis points on Jan. 5.
Calpine Corp., the biggest producer of power from natural
gas, sold $1.2 billion of 12-year debt to help repay term loan
borrowings obtained to support its 2008 exit from bankruptcy.
The debt yields 7.875 percent. The Houston-based company will
also use cash on hand to repay the bank debt, terminate the
credit line and to pay related fees, it said in a statement.
Companies sold $4.57 billion of high-yield debt in the U.S.
this month through yesterday, up from $2.89 billion in the same
period a year earlier, Bloomberg data show. Last week, issuance
soared to $48.5 billion, the highest weekly tally since $46.9
billion raised in the week ended May 8, 2009, the data show.
High-yield, or junk, bonds are rated below Baa3 by Moody’s
Investors Service and less than BBB- by Standard Poor’s. A
basis point is 0.01 percentage point.
Investment-grade corporate bond spreads widened one basis
point to 164 basis points yesterday, while yields on the debt
fell 2 basis points to 4.06 percent, according to the Bank of
America Merrill Lynch U.S. Corporate Master Index.
Last month, high-yield bonds returned 1.76 percent compared
with a loss of 0.95 percent for investment grade, Bank of
America Merrill Lynch data show. In November, junk bonds lost
1.1 percent versus a loss of 0.86 percent for high-grade debt.
The following is a description of at least $6.73 billion of
pending sales of dollar-denominated bonds in the U.S.
Investment Grade
RURAL ELECTRIFICATION CORP., India’s state-controlled
lender to power projects, is likely to sell $500 million of
bonds on Jan. 18, Finance Director Hari Das Khunteta said in a
telephone interview Dec. 29. Rural Electrification hired Credit
Agricole CIB, Royal Bank of Scotland Group Plc and Standard
Chartered Plc to sell the bonds. The company earlier planned to
sell bonds in December, postponing the offering because of
“adverse market conditions,” Khunteta said in a Dec. 3
interview.
TRANSNET LTD., South Africa’s state-owned ports, rail and
pipeline operator, said it may sell $1 billion worth of bonds in
international markets to pay for expansion. Transnet has 35.2
billion rand ($5.2 billion) of debt outstanding.
High Yield
**** MGM RESORTS INTERNATIONAL, the biggest casino owner on
the Las Vegas Strip, plans to sell $1.1 billion of senior
secured notes to refinance debt of its CityCenter Holdings LLC
joint venture with Dubai World, the company said in a statement
distributed by PR Newswire. MGM Resorts may issue $500 million
of five-year, first-lien notes as well as $600 million of six-
year, second-lien securities that can pay interest in cash or
additional debt, according to a person familiar with the
offering.
**** GRIFOLS SA, Europe’s largest maker of blood-plasma
products, plans to sell $1.1 billion of debt maturing in 2018 as
soon as this week, according to a person familiar with the
offering. Proceeds will be used to fund the company’s
acquisition of Talecris Biotherapeutics Holdings Corp., said the
person, who declined to be identified because terms aren’t set.
**** EXIDE TECHNOLOGIES INC., a producer of lead-acid
batteries, will sell seven-year senior notes in a $675 million
offering, the company said in a statement today. Proceeds will
be used to repay debt under a term-loan facility and to fund a
tender offer for its 10.5 percent notes due March 2013,
according to the statement.
**** POLYMER GROUP INC., the chemical company majority-owned
by MatlinPatterson Global Advisors LLC, plans to sell $530
million of senior secured notes maturing in 2019, according to a
statement distributed by PRNewswire. The notes may be priced at
the end of the week, according to a person familiar with the
offering, who declined to be identified because the terms aren’t
set. Proceeds will be used to finance the Charlotte, North
Carolina-based company’s acquisition by Blackstone Group LP, the
statement said.
**** HOPSON DEVELOPMENT HOLDINGS LTD., a Hong Kong-based
real estate developer, plans to start marketing a proposed sale
of U.S. dollar-denominated senior notes, according to a
statement from the company to the Hong Kong stock exchange. UBS
AG is the lead manager of the issue, the statement said.
**** LAREDO PETROLEUM INC., an independent exploration and
production company, plans to sell $300 million of eight-year
notes, according to a person familiar with the offering.
Proceeds will be used to retire the company’s term loan, repay
outstanding revolving-credit-facility borrowings and for general
corporate purposes.
ELIZABETH ARDEN INC. is marketing a $225 million issue of
10-year senior notes, the cosmetics maker said in a Jan. 7
statement. It plans to use proceeds to finance a tender offer
for its outstanding 7.5 percent senior subordinated debt due
2014, the statement said. SP assigned the new notes a B rating,
it said in a statement.
DYCOM INDUSTRIES INC., the service provider to
telecommunications companies, may sell $175 million of senior
subordinated notes due 2021, the company said in a Jan. 6
statement distributed by PR Newswire. It plans to use proceeds
finance a tender and solicitation offer for its $135.5 million
in outstanding 8.125 percent senior subordinated notes due 2015,
according to the statement. Moody’s rated the new notes Ba3 and
SP graded them BB-, the companies said in separate statements.
UCI INTERNATIONAL INC. plans to sell $250 million of senior
notes maturing in 2019, according to a person familiar with the
transaction, who declined to be identified because terms aren’t
set. Proceeds will be used to fund UCI’s acquisition by an
affiliate of the Auckland, New Zealand-based Rank Group,
according to a statement distributed by Business Wire.
STATS CHIPPAC LTD., a Singapore-based provider of
semiconductor test and assembly services, plans to sell $200
million of senior notes due 2016, according to an announcement
on the Singapore stock exchange. Proceeds will be used to repay
the company’s $234.5 million of debt outstanding under a $360
million senior term loan facility which was obtained in May,
according to the announcement. Deutsche Bank AG has been hired
to help manage the sale, the company said in the announcement.
BR MALLS PARTICIPACOES SA, Brazil’s biggest owner of
shopping malls, plans to sell senior unsecured perpetual debt
denominated in dollars, according to a person familiar with the
transaction. The notes can’t be redeemed for five years, said
the person, who asked not to be identified because terms aren’t
set. The debt is expected to be rated BB- by Standard Poor’s,
and proceeds may be used for capital expenditures, acquisitions
and debt repayment, the person said.
COMMSCOPE INC., the telecommunications equipment maker
being taken private by Carlyle Group, said it plans to sell $1.5
billion of seven-year notes to help finance the buyout.
CommScope also is marketing $1 billion of term loans to help pay
for the transaction, according to a filing with the Securities
and Exchange Commission. The Hickory, North Carolina-based
company began selling a $400 million asset-backed revolving
credit line that is part of the transaction in December.
AFREN PLC, a U.K. oil and gas explorer focused on West
Africa, hired Deutsche Bank AG, Goldman Sachs Group Inc. and BNP
Paribas SA to manage a sale of senior secured bonds in dollars,
according to two people with knowledge of the sale. The company
will meet bond investors in Europe and the U.S., said the
people, who declined to be identified because terms aren’t set.
CYRELA BRAZIL REALTY SA EMPREENDIMENTOS E PARTICIPACOES,
Brazil’s biggest homebuilder, hired Banco do Brasil SA, Credit
Suisse Group AG, Itau Unibanco Holding SA and Morgan Stanley to
arrange bond investor meetings, according to a person familiar
with the matter. Cyrela will meet with investors in Asia, Europe
and the U.S., said the person, who declined to be identified
because the conversations are private. SP raised its rating on
the company one step to BB on Sept. 30.
DELONG HOLDINGS LTD., a Singapore-based steel trader, hired
Credit Suisse Group AG to help it organize meetings with
investors ahead of an international sale of guaranteed senior
notes. Money raised will be used to redeem 5 percent convertible
bonds due 2012, to repay bank loans and for acquisitions
relating to iron ore and other raw materials used by the steel
industry, the company said in a statement to Singapore’s stock
exchange. The dollar-denominated notes were assigned a
provisional rating of B3 by Moody’s, the ratings company said in
a note.
PT ENERGI MEGA PERSADA, Indonesia’s second-biggest listed
oil company, hired Nomura Holdings Inc. to help it with a dollar
bond sale, according to a person familiar with the matter who
declined to be identified because terms aren’t set.
SI ORGANIZATION INC., the former Lockheed Martin Corp. unit
once known as Enterprise Integration Group, may sell $175
million of senior subordinated notes, according to SP. The
proceeds may be used with $340 million of bank debt and $370
million of new common stock to pay for its acquisition by
Veritas Capital, SP said.
Offerings in Pipeline
**** PT SULFINDO ADIUSAHA, an Indonesian company which makes
chlorine and chemicals, hired Barclays Plc and Standard
Chartered Plc to help it sell five-year, fixed-rate dollar
bonds, according to a person familiar with the matter.
**** INKIA ENERGY, a unit of Israel Corp., may sell bonds in
the U.S. to finance expansion of its electricity generation
business, according to a spokesman for the holding company. The
company plans to raise $250 million from the sale and is in
discussions with several foreign banks, Calcalist reported Jan.
9, without saying where it obtained the information.
AMERICAN INTERNATIONAL GROUP, the insurer rescued by the
U.S. government, is contemplating a new debt sale, a person
familiar with the matter said. The firm hasn’t considered a
timeline for when it might sell more bonds, said the person, who
declined to be identified because the terms aren’t set. AIG sold
$2 billion of bonds Dec. 1 in its first offering since it was
rescued by the U.S. government in 2008.
PTT EXPLORATION PRODUCTION PCL, Thailand’s only listed
oil and gas explorer, plans to sell bonds denominated in
dollars, according to a person familiar with the transaction.
PTT Exploration hired Barclays Plc to manage the sale, said the
person, who declined to be identified because terms aren’t set.
Barclays is arranging a U.S. dollar-denominated medium-term note
program for the company, the person said.
PTA BANK, or Eastern and Southern African Trade and
Development Bank, hired HSBC Holdings Plc and Standard Bank
Group Ltd. to arrange bond investor meetings in Europe and Asia,
according to two people with knowledge of the sale. The meetings
will be held in Hong Kong, Singapore, Zurich, Geneva and London,
said the people, who declined to be identified because terms
aren’t set. The company may sell dollar bonds after the
meetings, the people said.
MAQUINARIA ESPECIALIZADA MXO TRUST, a special-purpose
company expected to provide construction machinery services to
Corporacion GEO SAB de CV, hired Banco Santander SA to arrange
bond investor meetings, according to a person with knowledge of
the sale. A dollar bond sale may follow the meetings, to be held
in London, Boston, New York and Los Angeles, said the person,
who declined to be identified because terms aren’t set.
CREDIT BANK OF MOSCOW plans to sell five-year dollar bonds,
according to a person familiar with the transaction. The sale of
Reg S securities is being arranged by Commerzbank AG, ING Groep
NV and Raiffeisen Bank International, the banker said.
DOHA BANK QSC, Qatar’s third-largest bank, hired Morgan
Stanley and JPMorgan Chase Co. to manage a planned $500
million bond sale, its chief executive officer said. The
offering, announced on the Qatar Exchange website, will be
marketed to investors in the U.S., Europe and the Middle East,
Raghavan Seetharaman said in an Oct. 20 telephone interview.
BELARUS may sell debt in the U.S. and Asia, according to
Finance Minister Andrei Kharkovets. “We will undoubtedly enter
the Asian and the American markets,” Kharkovets said in an Oct.
15 interview in Moscow, declining to comment on the timing of
possible sales.
AL BARAKA BANK EGYPT ESC, a unit of Bahrain-based Albaraka
Banking Group, may sell dollar-denominated Islamic bonds in the
second half of 2011, the bank’s chairman said Sept. 29. The bank
hasn’t decided on the size of the bond, he said.
JSW STEEL LTD., India’s third-largest steelmaker, plans to
sell dollar bonds to help build a 200 billion-rupee ($4.4
billion) steel and power plant in West Bengal, Chief Financial
Officer Seshagiri Rao said.
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.
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.
To contact the reporter on this story:
Alexandra Harris in New York at
Aharris48@bloomberg.net.
To contact the editor responsible for this story:
Alan Goldstein at
agoldstein5@bloomberg.net.