Packaging Dynamics Corp., the maker
of industrial and specialty papers, plans to raise $400 million
in a sale of senior secured notes as the high-yield default rate
was projected to be as little as 1.5 percent this year.
The company plans to sell debt maturing in 2016 to repay its
senior secured credit line and finance a cash dividend to
shareholders, according to a statement distributed by
PRNewswire. The notes carry a B3 rating from Moody’s Investors
Service and a B from Standard Poor’s.
High-yield defaults will range from 1.5 percent to 2 percent
in 2011, Fitch Ratings said in a report today. The rate fell to
1.3 percent in 2010, down from 13.7 percent in 2009, according
to the report.
“For companies, yields are still very low and so they have
reason to refinance existing debt, said Anthony Valeri, market
strategist with LPL Financial Corp. in San Diego, which oversees
$293 billion in assets. “From an investor standpoint, it’s
still one of the best ways to get income as defaults are
declining.”
Packaging Dynamics was acquired by Kohlberg Co. in 2006
for $266 million, Bloomberg data show. The private-investment
company was formed in 1987 by Jerome Kohlberg Jr., a co-founder
of the buyout firm now known as KKR Co., and James Kohlberg,
according to its website.
Yield Spreads
The extra yield investors demand to own high-yield bonds
instead of U.S Treasuries narrowed 2 basis points to 510
yesterday while yields fell 1 basis point to 7.57 percent,
according to the Bank of America Merrill Lynch U.S. High Yield
Master II Index. Junk-bond spreads contracted 134 basis points
last year, the index shows. A basis point is 0.01 percentage
point.
Investment-grade corporate bond spreads fell 1 basis point
to 162 basis points more than Treasuries, according to the Bank
of America Merrill Lynch U.S. Corporate Master Index. Yields on
the debt rose 1 basis points to 4.06 percent, the index data
show.
Bacardi Ltd., the maker of flavored rums and Bombay
Sapphire Gin, sold 10-year debt in a $300 million offering
yesterday as investment-grade borrowers issued $2.3 billion of
bonds, Bloomberg data show. The securities were rated Baa1 by
Moody’s and BBB by SP, the data show.
The following is a description of at least $3.91 billion of
pending sales of dollar-denominated bonds in the U.S.
Investment Grade
CNOOC LTD., China’s biggest offshore energy producer, hired
six banks to help arrange a sale of 10- and 30-year U.S. dollar
bonds, the company said in a statement to the Hong Kong Stock
Exchange Jan. 13. Standard Poor’s assigned the proposed notes
an AA- rating.
HYUNDAI MOTOR CO., the fastest-growing mass-market
automaker in the U.S. last year, may issue notes through a
finance unit, according to a person familiar with the
transaction. The debt, to be offered through Hyundai Capital
America, may be rated Baa2 by Moody’s Investors Service, said
the person, who declined to be identified because terms aren’t
set.
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.
Not Rated
SWISSPORT INTERNATIONAL AG, an airport ground services firm
acquired by Paris-based PAI Partners in November, plans to
sell the equivalent of 750 million Swiss francs ($778 million)
of seven-year notes in a two-part offering, according to a
person familiar with the issue. The notes will be issued in
francs and dollars and will not be callable for the first three
years, said the person, who declined to be identified because
terms aren’t set. The bonds will be issued through Aguila 3 SA.
High Yield
PACKAGING DYNAMICS CORP., the manufacturer of industrial
and specialty papers, plans to sell $400 million of senior
secured maturing in 2016 to repay the company’s senior secured
credit facility and pay a cash dividend to shareholders,
according to a statement distributed by PRNewswire. The notes
carry a B3 rating from Moody’s Investors Service and a B from
SP.
GREAT LAKES DREDGE DOCK CORP. plans to sell $250 million
of senior unsecured notes, the company said in a statement
distributed by Business Wire. Proceeds will be used to repay
outstanding 7.75 percent senior subordinated debt due December
2013 and for general corporate purposes, which may include
acquisitions, according to the statement from the Oak Brook,
Illinois-based company. The securities are rated B2 by Moody’s,
Bloomberg data show.
OAO NOVATEK plans to sell bonds in dollars in a benchmark
offering, according to two people with knowledge of the issue.
BNP Paribas SA, Citigroup Inc. and Royal Bank of Scotland Group
Plc are managing the sale, the people said. The notes are rated
Baa2 by Moody’s Investors Service and BBB- by Standard Poor’s,
Bloomberg data show.
ESKOM HOLDINGS LTD. may sell up to $2 billion of 10-year
dollar bonds, according to Jeremy Brewin, who helps manage $2.5
billion at Aviva Investors. Brewin met with officials from
Eskom, the utility that supplies 95 percent of South Africa’s
electricity, he said in a telephone interview from London. The
securities are rated BBB+ by Standard Poor’s, Bloomberg data
show.
REALOGY CORP. plans to sell $700 million of secured debt,
the New Jersey-based company said in a statement distributed by
Marketwire. The owner of Century 21 and Coldwell Banker plans to
use proceeds to repay a portion of its term loans, while seeking
to extend maturities on the bank debt by three years, the
statement said.
CONSTELLATION ENTERPRISES LLC plans to sell $130 million of
5-year debt, according to a person familiar with the offering.
Proceeds will be used to finance the company’s bank loans, said
the person, who declined to be identified because terms aren’t
set. The loans are expected to receive junk ratings from Moody’s
Investors Service and Standard Poor’s, the person said.
ACE CASH EXPRESS INC. said it plans to offer $350 million
of debt to help pay for a tender offer for its 10.25 percent
senior notes due in 2014, the company said in a statement
distributed by PR Newswire. ACE Cash Express is the largest
owner and operator of check cashing stores in the U.S.,
according to the statement.
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.
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
GAIL LTD., a government-run gas distributor in India, may
sell $200 million of dollar-denominated bonds, Finance Director
Raj Kumar Goel said in New Delhi.
EXCEL MARITIME CARRIERS LTD. announced Jan. 14 that it
plans to issue $250 million of Senior Notes due 2019. The
Athens, Greece-based company plans to use the proceeds to repay
outstanding debt, according to a statement distributed by
Marketwire.
WESTMORELAND COAL COMPANY announced Jan. 13 that it plans
to issue $150 million of senior secured notes due 2018. Proceeds
from the notes will be used to pay dividends on the company’s
Series A preferred stock, Westmoreland said in a statement.
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:
Ashley Lutz in New York at
alutz8@bloomberg.net
To contact the editor responsible for this story:
Alan Goldstein at
agoldstein5@bloomberg.net.