By Keith Jenkins - Sep 15, 2010 4:58 PM GMT+0800
German bonds fell as the Bank of Japan sold yen, curbing investors’ appetite for the euro- region’s safest assets before the German government sells 10- year securities.
Bunds also retreated before a report that economists say will show consumer prices in the euro area rose by 0.2 percent in August. Japan intervened in the currency market for the first time since 2004 after the yen reached a 15-year high against the dollar. The German government plans to sell 5 billion euros ($6.5 billion) of 10-year bonds today. Portugal will sell 750 million of 12-month Treasury bills.
“The Bank of Japan’s intervention gave risk assets a boost, and that spilled over and had a negative impact on bunds,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “The 10-year bund re-opening may give minor headwinds to the market, but not a major burden.”
The yield on the bund, Europe’s benchmark security rose 2 basis points to 2.4 percent as of 9:37 a.m. in London. It reached 2.47 percent on Sept. 13, the highest since Aug. 11. The 2.25 percent security maturing in September 2020 fell 0.17, or 1.70 euros per 1,000-euro face amount, to 98.73. The two-year note yield also gained 2 basis points, to 0.74 percent.
German bonds have declined this month, with the 10-year yield advancing 28 basis points, amid reports that indicate the global economic recovery is on track. Data on Sept. 11 showed China output rose 13.9 percent last month from a year earlier, faster than economists forecast.
Greek Spread
The extra yield investors demand to hold Greek 10-year debt instead of bunds fell 2 basis points to 898 basis.
Greece sold 26-week Treasury bills yesterday. Greek banks bought 70 percent of the bills, Imerisia newspaper said today, without saying where it got the information. Greece plans to sell 13-week bills on Sept. 21.
German bonds have returned 8.7 percent this year, compared with an 8 percent gain for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Portuguese debt has lost 4.5 percent, while Greek securities have given up 19 percent, the indexes show.
To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net
From Bloombergs published on Sep 15, 2010 4:58 PM GMT+0800
Get some free education prior to investing in Bonds. Find out its latest news and updates in the current market. If you are ready, don't waste time, start investing!
Bond Buyers Getting Burned by Going Long as Yields Climb: Credit Markets
By Shannon D. Harrington and Tim Catts - Sep 13, 2010 10:24 AM GMT+0800
Investors who snapped up the biggest supply of long-maturity bonds since March last month are being punished as interest rates climb on diminished concerns the U.S. will relapse into recession.
Corporate bonds due in 15 years or more have lost 3.15 percent since Aug. 31 while notes maturing in 1 to 10 years lost 0.67 percent, Bank of America Merrill Lynch index data show. In the three months ended in August, the longer-maturity bonds had gained 11 percent, more than double the 5 percent gain for shorter-dated securities, as record-low yields sent investors searching for higher-paying fixed-income securities.
The losses underscore the extra risk in the longest-maturity bonds if the economy recovers faster than investors expect, causing interest rates to jump and eroding the value of the debt. The duration of company bonds, a measure of the securities’ price sensitivity to yield changes, reached a record at the end of August, according to Bank of America Merrill Lynch’s U.S. Corporate Master index.
“Now is not the time to reach for yield by extending out on the yield curve,” said James Barnes, a fixed-income portfolio manager at Wyomissing, Pennsylvania-based National Penn Investors Trust Co. “If we grow very sluggishly, it still bodes well for interest rates going higher.”
Companies taking advantage of lower yields last month sold $14.4 billion of U.S. dollar-denominated debt maturing in more than 15 years, according to data compiled by Bloomberg. That’s the biggest sum since March, when $15.6 billion of the bonds were sold.
Rising Treasury Yields
The yield on the 10-year Treasury note has climbed 32 basis points, or 0.32 percentage point, this month to 2.79 percent as of Sept. 10. The yield had dropped to the lowest since January 2009 after the Federal Reserve said some policy makers saw greater risks to the economic recovery and that it would maintain holdings of securities to prevent money from being drained out of the financial system it helped prop up after the credit seizure two years ago.
Elsewhere in credit markets, the extra yield investors demand to hold corporate bonds rather than government securities fell to the lowest in a month. Hewlett-Packard Co. and Home Depot Inc. led $105.9 billion of bond sales worldwide last week, more than double the pace of the period ended Sept. 3. The cost of protecting corporate debt from default in the U.S. fell for a second week, benchmark indexes of credit-default swaps show. Leveraged loan prices rose to the highest since Aug. 11.
Hewlett-Packard Offering
Spreads on company bonds narrowed 4 basis points for the week to 175 basis points, the lowest since Aug. 10, according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. Average yields climbed to 3.637 percent, compared with 3.595 percent on Sept. 3.
Hewlett-Packard, the world’s largest personal-computer maker, and Atlanta-based Home Depot led the surge of offerings as companies sought to take advantage of U.S. investment-grade borrowing costs near the lowest on record.
Palo Alto, California-based Hewlett-Packard’s $3 billion offering consisted of $800 million of two-year floating-rate securities and $1.1 billion each of three- and five-year debt, Bloomberg data show. Home Depot, the largest-home improvement retailer, sold $1 billion of debt split evenly between 10- and 30-year maturities in its first offering since December 2006.
Yields as of the end of last week were at 3.958 percent, after reaching as low as 3.743 percent on Aug. 24, the lowest in the measure’s history dating to October 1986, according to the Bank of America Merrill Lynch U.S. Corporate Master index.
Credit Swaps Decline
The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 1 basis point last week to 102.92 basis points, the lowest since Aug. 9, according to prices from Markit Group Ltd. In London, the Markit iTraxx Europe Index of 125 companies with investment-grade ratings declined 0.03 basis point to 105.87, Markit prices show.
Today, the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 3 basis points to 117 basis points, Barclays Plc prices show.
The indexes typically fall as investor confidence improves and rise as it deteriorates. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
The Standard & Poor’s/LSTA US Leveraged Loan 100 Index rose 0.1 cent for the week to 89.67 cents on the dollar. The index, which tracks the 100 largest dollar-denominated first-lien leveraged loans, returned 4.62 percent this year.
Duration Measure Falling
In emerging markets, relative yields rose 2 basis points for the week to 277 basis points, according to JPMorgan Chase & Co. index data. Spreads soared as high as 289 basis points on Sept. 7 before declining in each of the next three days.
The duration of U.S. investment-grade corporate bonds reached 6.56 years on Aug. 31, the highest since at least 1996, Bank of America Merrill Lynch index data show. The measure, which began the year at 6.2 years, has since fallen back to 6.43.
“I would not be applying fresh capital to the long end of the yield curve,” said Chad Morganlander, a money manager at Stifel Nicolaus & Co., which oversees $90 billion. “Any sign of economic vitality, without government assistance, would be deleterious.” Morganlander, who’s based in Florham Park, New Jersey, said he’s buying investment-grade securities that mature in five years or less.
Yields on 10-year Treasury notes reached a one-month high on Sept. 10 on evidence the world’s largest economy isn’t falling into another recession.
NextEra, Abbott
Benchmark debt yields had a third week of gains in the longest stretch of advances since October. The Commerce Department reported Sept. 10 that inventories at U.S. wholesalers rose in July by the most in two years on a rebound in demand. A 1.3 percent increase in the value of inventories was three times the median estimate in a Bloomberg News survey of 32 economists.
Futures show a 9.5 percent chance the Fed will raise its target rate for overnight loans between banks by at least a quarter-percentage point by March, up from 7.5 percent a week ago. The central bank has left the rate unchanged in a range of zero to 0.25 percent since December 2008.
Bonds due in 15 years or more from Juno Beach, Florida- based NextEra Energy Inc., the largest U.S. producer of renewable energy, have lost 4.28 percent on average this month, Bank of America Merrill Lynch index data show. Longer-dated bonds of drugmaker Abbott Laboratories of Abbott Park, Illinois, declined 4.43 percent, while debt from Armonk, New York-based computer-services provider International Business Machines Corp. fell 4.08 percent.
IBM Bonds Fall
IBM’s $1.52 billion of 5.6 percent bonds due in 2039 have dropped 5.9 cents to 112.1 cents on the dollar since Aug. 25, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The yield rose to 4.82 percent from 4.49 percent.
Investors should seek corporate bonds that pack a bigger cushion against spikes in interest rates, including the highest- rated high-yield, high-risk bonds, according to strategists at Goldman Sachs Group Inc.
Speculative-grade or junk bonds, rated below Baa3 by Moody’s Investors Service and lower than BBB- by S&P, typically offer yields that compensate investors more for the risk that the company defaults. As a result, the bonds may gain more from declining default risk than they lose from rising interest rates, said Alberto Gallo, a New York-based strategist at Goldman Sachs.
‘More Penalized’
“If rates rise, investment-grade will be more penalized because of its higher duration and because rates are a higher percentage of total yield,” Gallo said in an interview. “If the economy grows, spreads can compress and absorb the rise in rates. However, spreads are a smaller percentage of the yield in investment-grade than they are in high yield.”
Fixed-income investors also may hedge against rises in interest rates with derivatives contracts.
U.S. corporate bonds in the BB rated tier, the highest in speculative grade, yield 468 basis points more than similar- maturity Treasuries, Bank of America Merrill Lynch index data show. The spread is almost double the 239 basis points offered by BBB tier bonds, the lowest investment-grade ratings. The average spread on all investment-grade bonds is 187 basis points.
To contact the reporters on this story: Shannon D. Harrington in New York at sharrington6@bloomberg.net; Tim Catts in New York at tcatts1@bloomberg.net
From Bloomberg published on Sep 13, 2010 10:24 AM GMT+0800
Investors who snapped up the biggest supply of long-maturity bonds since March last month are being punished as interest rates climb on diminished concerns the U.S. will relapse into recession.
Corporate bonds due in 15 years or more have lost 3.15 percent since Aug. 31 while notes maturing in 1 to 10 years lost 0.67 percent, Bank of America Merrill Lynch index data show. In the three months ended in August, the longer-maturity bonds had gained 11 percent, more than double the 5 percent gain for shorter-dated securities, as record-low yields sent investors searching for higher-paying fixed-income securities.
The losses underscore the extra risk in the longest-maturity bonds if the economy recovers faster than investors expect, causing interest rates to jump and eroding the value of the debt. The duration of company bonds, a measure of the securities’ price sensitivity to yield changes, reached a record at the end of August, according to Bank of America Merrill Lynch’s U.S. Corporate Master index.
“Now is not the time to reach for yield by extending out on the yield curve,” said James Barnes, a fixed-income portfolio manager at Wyomissing, Pennsylvania-based National Penn Investors Trust Co. “If we grow very sluggishly, it still bodes well for interest rates going higher.”
Companies taking advantage of lower yields last month sold $14.4 billion of U.S. dollar-denominated debt maturing in more than 15 years, according to data compiled by Bloomberg. That’s the biggest sum since March, when $15.6 billion of the bonds were sold.
Rising Treasury Yields
The yield on the 10-year Treasury note has climbed 32 basis points, or 0.32 percentage point, this month to 2.79 percent as of Sept. 10. The yield had dropped to the lowest since January 2009 after the Federal Reserve said some policy makers saw greater risks to the economic recovery and that it would maintain holdings of securities to prevent money from being drained out of the financial system it helped prop up after the credit seizure two years ago.
Elsewhere in credit markets, the extra yield investors demand to hold corporate bonds rather than government securities fell to the lowest in a month. Hewlett-Packard Co. and Home Depot Inc. led $105.9 billion of bond sales worldwide last week, more than double the pace of the period ended Sept. 3. The cost of protecting corporate debt from default in the U.S. fell for a second week, benchmark indexes of credit-default swaps show. Leveraged loan prices rose to the highest since Aug. 11.
Hewlett-Packard Offering
Spreads on company bonds narrowed 4 basis points for the week to 175 basis points, the lowest since Aug. 10, according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. Average yields climbed to 3.637 percent, compared with 3.595 percent on Sept. 3.
Hewlett-Packard, the world’s largest personal-computer maker, and Atlanta-based Home Depot led the surge of offerings as companies sought to take advantage of U.S. investment-grade borrowing costs near the lowest on record.
Palo Alto, California-based Hewlett-Packard’s $3 billion offering consisted of $800 million of two-year floating-rate securities and $1.1 billion each of three- and five-year debt, Bloomberg data show. Home Depot, the largest-home improvement retailer, sold $1 billion of debt split evenly between 10- and 30-year maturities in its first offering since December 2006.
Yields as of the end of last week were at 3.958 percent, after reaching as low as 3.743 percent on Aug. 24, the lowest in the measure’s history dating to October 1986, according to the Bank of America Merrill Lynch U.S. Corporate Master index.
Credit Swaps Decline
The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 1 basis point last week to 102.92 basis points, the lowest since Aug. 9, according to prices from Markit Group Ltd. In London, the Markit iTraxx Europe Index of 125 companies with investment-grade ratings declined 0.03 basis point to 105.87, Markit prices show.
Today, the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 3 basis points to 117 basis points, Barclays Plc prices show.
The indexes typically fall as investor confidence improves and rise as it deteriorates. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
The Standard & Poor’s/LSTA US Leveraged Loan 100 Index rose 0.1 cent for the week to 89.67 cents on the dollar. The index, which tracks the 100 largest dollar-denominated first-lien leveraged loans, returned 4.62 percent this year.
Duration Measure Falling
In emerging markets, relative yields rose 2 basis points for the week to 277 basis points, according to JPMorgan Chase & Co. index data. Spreads soared as high as 289 basis points on Sept. 7 before declining in each of the next three days.
The duration of U.S. investment-grade corporate bonds reached 6.56 years on Aug. 31, the highest since at least 1996, Bank of America Merrill Lynch index data show. The measure, which began the year at 6.2 years, has since fallen back to 6.43.
“I would not be applying fresh capital to the long end of the yield curve,” said Chad Morganlander, a money manager at Stifel Nicolaus & Co., which oversees $90 billion. “Any sign of economic vitality, without government assistance, would be deleterious.” Morganlander, who’s based in Florham Park, New Jersey, said he’s buying investment-grade securities that mature in five years or less.
Yields on 10-year Treasury notes reached a one-month high on Sept. 10 on evidence the world’s largest economy isn’t falling into another recession.
NextEra, Abbott
Benchmark debt yields had a third week of gains in the longest stretch of advances since October. The Commerce Department reported Sept. 10 that inventories at U.S. wholesalers rose in July by the most in two years on a rebound in demand. A 1.3 percent increase in the value of inventories was three times the median estimate in a Bloomberg News survey of 32 economists.
Futures show a 9.5 percent chance the Fed will raise its target rate for overnight loans between banks by at least a quarter-percentage point by March, up from 7.5 percent a week ago. The central bank has left the rate unchanged in a range of zero to 0.25 percent since December 2008.
Bonds due in 15 years or more from Juno Beach, Florida- based NextEra Energy Inc., the largest U.S. producer of renewable energy, have lost 4.28 percent on average this month, Bank of America Merrill Lynch index data show. Longer-dated bonds of drugmaker Abbott Laboratories of Abbott Park, Illinois, declined 4.43 percent, while debt from Armonk, New York-based computer-services provider International Business Machines Corp. fell 4.08 percent.
IBM Bonds Fall
IBM’s $1.52 billion of 5.6 percent bonds due in 2039 have dropped 5.9 cents to 112.1 cents on the dollar since Aug. 25, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The yield rose to 4.82 percent from 4.49 percent.
Investors should seek corporate bonds that pack a bigger cushion against spikes in interest rates, including the highest- rated high-yield, high-risk bonds, according to strategists at Goldman Sachs Group Inc.
Speculative-grade or junk bonds, rated below Baa3 by Moody’s Investors Service and lower than BBB- by S&P, typically offer yields that compensate investors more for the risk that the company defaults. As a result, the bonds may gain more from declining default risk than they lose from rising interest rates, said Alberto Gallo, a New York-based strategist at Goldman Sachs.
‘More Penalized’
“If rates rise, investment-grade will be more penalized because of its higher duration and because rates are a higher percentage of total yield,” Gallo said in an interview. “If the economy grows, spreads can compress and absorb the rise in rates. However, spreads are a smaller percentage of the yield in investment-grade than they are in high yield.”
Fixed-income investors also may hedge against rises in interest rates with derivatives contracts.
U.S. corporate bonds in the BB rated tier, the highest in speculative grade, yield 468 basis points more than similar- maturity Treasuries, Bank of America Merrill Lynch index data show. The spread is almost double the 239 basis points offered by BBB tier bonds, the lowest investment-grade ratings. The average spread on all investment-grade bonds is 187 basis points.
To contact the reporters on this story: Shannon D. Harrington in New York at sharrington6@bloomberg.net; Tim Catts in New York at tcatts1@bloomberg.net
From Bloomberg published on Sep 13, 2010 10:24 AM GMT+0800
Corporate Bond Sales Fall in U.S. Amid Economic Slowdown: New Issue Alert
By Sapna Maheshwari - Aug 31, 2010 4:19 PM GMT+0800
Companies are planning to sell at least $4.25 billion of debt as signs show the U.S. economic recovery may falter.
Bond sales totaled $6.7 billion in the five days ended Aug. 27, a 56 percent drop from the prior week, according to data compiled by Bloomberg. No junk-rated companies have sold debt in the U.S. since Aug. 20, Bloomberg data show.
“A lot of people started the year off thinking we’d see some positive signs of economic data and we’d really be able to get this recovery going,” said Rajeev Sharma, a money manager at First Investors Management Co., who oversees $1.4 billion of investment-grade debt. “It seems to be a lot slower than what most investors thought.”
Federal Reserve Chairman Ben S. Bernanke said Aug. 27 the central bank “will do all that it can” to sustain a recovery. His speech at the annual economic symposium in Jackson Hole, Wyoming, came after a week of steadily negative news including weaker-than-expected home sales and a revision showing the economy grew by 1.6 percent in second quarter rather than the 2.4 percent initially reported by the Commerce Department.
A report yesterday showed personal income also climbed less than expected in July.
The extra yield investors demand to own investment-grade corporate bonds instead of Treasuries rose 1 basis point to 192 basis points, according to the Bank of America Merrill Lynch U.S. Corporate Master index. Yields fell 8 basis points to 3.798 percent. The index touched a record 3.74 percent on Aug. 24, the lowest in the history of the measure dating to October 1986. A basis point is 0.01 percentage point.
Sara Lee Corp., the maker of Ball Park hot dogs and Hillshire Farm meat products, sold $800 million of debt in a two-part offering yesterday, and Dominion Resources Inc., the owner of Virginia’s largest utility, sold $250 million of notes. They were the only two bond offerings for the day, Bloomberg data show.
Utilities have issued at least $4.17 billion of debt this month, the most since selling $5.2 billion in March, Bloomberg data show.
September will likely have “a huge calendar” of bond sales, Sharma said in a telephone interview. Last September, companies issued $125 billion of bonds, Bloomberg data show.
“September, typically speaking, is a big month,” Sharma said. “I would not be surprised to see about $5 billion in issuance per day.”
Companies sold $97.3 billion of bonds this month, a 37 percent increase from the similar period last year and the busiest August since 2007, Bloomberg data show. July corporate bond sales were $90.3 billion.
Spreads on high-yield, high-risk debt widened 8 basis points to 689 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Yields on the securities fell 2 basis points to 8.565 percent.
Junk bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s.
The following is a description of at least $4.25 billion of pending sales of dollar-denominated bonds in the U.S.
Investment Grade
AON CORP., the world’s largest insurance brokerage, plans to sell as much as $1.5 billion of senior notes to help finance its acquisition of Hewitt Associates Inc., the Chicago-based company said in an Aug. 16 regulatory filing. Aon may also use proceeds to refinance Hewitt’s existing debt and to pay related expenses, it said in the filing.
DOHA BANK QSC, Qatar’s third-largest bank, may raise as much as $1 billion from bond sales, its chief executive officer said. The money is likely to be raised 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.
Not Rated
*****KOREA DEVELOPMENT BANK, the state-run lender known as KDB, plans to sell 5-year dollar-denominated global notes as soon as this week, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. The Seoul-based lender is considering selling as much as $1 billion of dollar-denominated bonds to repay maturing debt, according to another three people familiar with the matter. The Seoul-based lender may sell at least $500 million of notes, said the people, who asked not to be identified as a final decision hasn’t been made.
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.
High Yield
NBTY INC., the maker of Nature’s Bounty and MET-Rx nutritional supplements, may issue $900 million of bonds in addition to seeking a $1.5 billion term loan and a $200 million revolving line of credit 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. S&P assigned the notes, or borrowings under a bridge credit facility in their place, a rank of B.
UNIVERSAL HEALTH SERVICES INC., the operator of more than 100 U.S. medical facilities that’s buying Psychiatric Solutions Inc., cut its offering of senior unsecured notes to $250 million, according to a person familiar with the transaction. It increased the size of the term loans it’s seeking by $100 million, said the person, who declined to be identified because terms aren’t set. The King of Prussia, Pennsylvania-based company previously planned to issue $400 million of senior unsecured debt to help finance the acquisition, according to a filing with the Securities and Exchange Commission.
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. The company plans to begin meeting with investors in Asia, Europe and the U.S. on July 19, said the person, who declined to be identified because terms aren’t set. 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 for mainly for capital expenditures and general corporate purposes, Moody’s said in the report.
Offerings in Pipeline
***** RENHE COMMERCIAL HOLDINGS CO. may sell dollar bonds after it hired Bank of America Corp., BOC International Holdings Ltd. and UBS AG to arrange talks with bond investors in Asia, Europe and the U.S. starting Aug. 30, said a person familiar with the matter. The developer of shopping centers in China is rated Ba2 at Moody’s and BB at S&P.
FORETHOUGHT FINANCIAL GROUP INC. plans to sell $150 million of 10-year bonds, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. S&P assigned the notes a grade of BBB- in a March 24 report.
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 period, he had said on April 16.
THE PHILIPPINES hired eight banks to help arrange the sale of 10-year bonds, which may also include five- and seven-year issues, Treasurer Roberto Tan wrote in a mobile-phone message. The Philippines is also preparing to seek central bank approval for a planned sale of new dollar-denominated debt to exchange for older, shorter-dated notes, Finance Secretary Cesar Purisima said on August 2.
UKRAINE may sell bonds in the international capital markets, according to Dragon Capital, the former Soviet republic’s biggest brokerage. The government may sell $1.5 billion to $2 billion of 10-year, dollar-denominated debt with a yield of 7 percent to 7.5 percent after getting approval for a new International Monetary Fund loan and having its credit rating raised by Standard & Poor’s, said Olena Bilan, Dragon’s chief economist, at a press briefing in Kiev on July 30.
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 approximately $650 million of Islamic bonds in October, 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.
CORPORACION FINANCIERA DE DESAROLLO SA, Peru’s state development bank known as Cofide, plans to sell as much as $250 million of bonds, according to Chief Financial Officer Carlos Linares. Linares said in an interview in Lima, that the lender is selling long-term debt as it boosts lending to local infrastructure projects. “Peru’s need for infrastructure is huge,” Linares said. “The government is trying to promote foreign investment in a long list of projects.”
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 the same 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.
BANK FOR INVESTMENT & DEVELOPMENT OF VIETNAM received approval from the central bank to issue 7 trillion dong ($369 million) of notes and another 3 trillion dong of dollar- denominated notes in 2010, according to a statement on State Bank of Vietnam’s Web site.
BOLIVIA plans its first international bond sale in more than 70 years as early as the end of 2011, Finance Minister Luis Arce said. He didn’t disclose the size of the offering.
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORP. of the Philippines may sell between $750 million and $1.5 billion of dollar-denominated bonds “anytime” to help refinance maturing debt, Vice Chairman Jose Ibazeta said. The company manages the finances of state utility National Power Corp.
BRISBANE AIRPORT CORP., owner of Australia’s third-busiest airport, may sell bonds in the U.S. as it pursues new markets to help refinance debt and pay for a new runway. The company is considering a 10- or 15-year U.S. private placement and a five- to seven-year Australian dollar bond sale in late 2010 or early 2011, Chief Financial Officer Tim Rothwell said in a phone interview from Brisbane.
VIETNAM NATIONAL COAL-MINERAL INDUSTRIES GROUP, the state- owned coal producer known as Vinacomin, plans to sell as much as $500 million of bonds overseas to fund mining and energy projects, according to Deputy Chief Executive Officer Nguyen Van Hai.
FINLAND may sell five-year bonds denominated in dollars, the Finnish Treasury said in a document posted on its Web site.
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, 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: Sapna Maheshwari in New York at sapnam@bloomberg.net.
From Bloomberg published on Aug 31, 2010 4:19 PM GMT+0800
Companies are planning to sell at least $4.25 billion of debt as signs show the U.S. economic recovery may falter.
Bond sales totaled $6.7 billion in the five days ended Aug. 27, a 56 percent drop from the prior week, according to data compiled by Bloomberg. No junk-rated companies have sold debt in the U.S. since Aug. 20, Bloomberg data show.
“A lot of people started the year off thinking we’d see some positive signs of economic data and we’d really be able to get this recovery going,” said Rajeev Sharma, a money manager at First Investors Management Co., who oversees $1.4 billion of investment-grade debt. “It seems to be a lot slower than what most investors thought.”
Federal Reserve Chairman Ben S. Bernanke said Aug. 27 the central bank “will do all that it can” to sustain a recovery. His speech at the annual economic symposium in Jackson Hole, Wyoming, came after a week of steadily negative news including weaker-than-expected home sales and a revision showing the economy grew by 1.6 percent in second quarter rather than the 2.4 percent initially reported by the Commerce Department.
A report yesterday showed personal income also climbed less than expected in July.
The extra yield investors demand to own investment-grade corporate bonds instead of Treasuries rose 1 basis point to 192 basis points, according to the Bank of America Merrill Lynch U.S. Corporate Master index. Yields fell 8 basis points to 3.798 percent. The index touched a record 3.74 percent on Aug. 24, the lowest in the history of the measure dating to October 1986. A basis point is 0.01 percentage point.
Sara Lee Corp., the maker of Ball Park hot dogs and Hillshire Farm meat products, sold $800 million of debt in a two-part offering yesterday, and Dominion Resources Inc., the owner of Virginia’s largest utility, sold $250 million of notes. They were the only two bond offerings for the day, Bloomberg data show.
Utilities have issued at least $4.17 billion of debt this month, the most since selling $5.2 billion in March, Bloomberg data show.
September will likely have “a huge calendar” of bond sales, Sharma said in a telephone interview. Last September, companies issued $125 billion of bonds, Bloomberg data show.
“September, typically speaking, is a big month,” Sharma said. “I would not be surprised to see about $5 billion in issuance per day.”
Companies sold $97.3 billion of bonds this month, a 37 percent increase from the similar period last year and the busiest August since 2007, Bloomberg data show. July corporate bond sales were $90.3 billion.
Spreads on high-yield, high-risk debt widened 8 basis points to 689 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Yields on the securities fell 2 basis points to 8.565 percent.
Junk bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s.
The following is a description of at least $4.25 billion of pending sales of dollar-denominated bonds in the U.S.
Investment Grade
AON CORP., the world’s largest insurance brokerage, plans to sell as much as $1.5 billion of senior notes to help finance its acquisition of Hewitt Associates Inc., the Chicago-based company said in an Aug. 16 regulatory filing. Aon may also use proceeds to refinance Hewitt’s existing debt and to pay related expenses, it said in the filing.
DOHA BANK QSC, Qatar’s third-largest bank, may raise as much as $1 billion from bond sales, its chief executive officer said. The money is likely to be raised 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.
Not Rated
*****KOREA DEVELOPMENT BANK, the state-run lender known as KDB, plans to sell 5-year dollar-denominated global notes as soon as this week, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. The Seoul-based lender is considering selling as much as $1 billion of dollar-denominated bonds to repay maturing debt, according to another three people familiar with the matter. The Seoul-based lender may sell at least $500 million of notes, said the people, who asked not to be identified as a final decision hasn’t been made.
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.
High Yield
NBTY INC., the maker of Nature’s Bounty and MET-Rx nutritional supplements, may issue $900 million of bonds in addition to seeking a $1.5 billion term loan and a $200 million revolving line of credit 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. S&P assigned the notes, or borrowings under a bridge credit facility in their place, a rank of B.
UNIVERSAL HEALTH SERVICES INC., the operator of more than 100 U.S. medical facilities that’s buying Psychiatric Solutions Inc., cut its offering of senior unsecured notes to $250 million, according to a person familiar with the transaction. It increased the size of the term loans it’s seeking by $100 million, said the person, who declined to be identified because terms aren’t set. The King of Prussia, Pennsylvania-based company previously planned to issue $400 million of senior unsecured debt to help finance the acquisition, according to a filing with the Securities and Exchange Commission.
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. The company plans to begin meeting with investors in Asia, Europe and the U.S. on July 19, said the person, who declined to be identified because terms aren’t set. 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 for mainly for capital expenditures and general corporate purposes, Moody’s said in the report.
Offerings in Pipeline
***** RENHE COMMERCIAL HOLDINGS CO. may sell dollar bonds after it hired Bank of America Corp., BOC International Holdings Ltd. and UBS AG to arrange talks with bond investors in Asia, Europe and the U.S. starting Aug. 30, said a person familiar with the matter. The developer of shopping centers in China is rated Ba2 at Moody’s and BB at S&P.
FORETHOUGHT FINANCIAL GROUP INC. plans to sell $150 million of 10-year bonds, according to a person familiar with the transaction, who declined to be identified because terms aren’t set. S&P assigned the notes a grade of BBB- in a March 24 report.
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 period, he had said on April 16.
THE PHILIPPINES hired eight banks to help arrange the sale of 10-year bonds, which may also include five- and seven-year issues, Treasurer Roberto Tan wrote in a mobile-phone message. The Philippines is also preparing to seek central bank approval for a planned sale of new dollar-denominated debt to exchange for older, shorter-dated notes, Finance Secretary Cesar Purisima said on August 2.
UKRAINE may sell bonds in the international capital markets, according to Dragon Capital, the former Soviet republic’s biggest brokerage. The government may sell $1.5 billion to $2 billion of 10-year, dollar-denominated debt with a yield of 7 percent to 7.5 percent after getting approval for a new International Monetary Fund loan and having its credit rating raised by Standard & Poor’s, said Olena Bilan, Dragon’s chief economist, at a press briefing in Kiev on July 30.
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 approximately $650 million of Islamic bonds in October, 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.
CORPORACION FINANCIERA DE DESAROLLO SA, Peru’s state development bank known as Cofide, plans to sell as much as $250 million of bonds, according to Chief Financial Officer Carlos Linares. Linares said in an interview in Lima, that the lender is selling long-term debt as it boosts lending to local infrastructure projects. “Peru’s need for infrastructure is huge,” Linares said. “The government is trying to promote foreign investment in a long list of projects.”
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 the same 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.
BANK FOR INVESTMENT & DEVELOPMENT OF VIETNAM received approval from the central bank to issue 7 trillion dong ($369 million) of notes and another 3 trillion dong of dollar- denominated notes in 2010, according to a statement on State Bank of Vietnam’s Web site.
BOLIVIA plans its first international bond sale in more than 70 years as early as the end of 2011, Finance Minister Luis Arce said. He didn’t disclose the size of the offering.
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORP. of the Philippines may sell between $750 million and $1.5 billion of dollar-denominated bonds “anytime” to help refinance maturing debt, Vice Chairman Jose Ibazeta said. The company manages the finances of state utility National Power Corp.
BRISBANE AIRPORT CORP., owner of Australia’s third-busiest airport, may sell bonds in the U.S. as it pursues new markets to help refinance debt and pay for a new runway. The company is considering a 10- or 15-year U.S. private placement and a five- to seven-year Australian dollar bond sale in late 2010 or early 2011, Chief Financial Officer Tim Rothwell said in a phone interview from Brisbane.
VIETNAM NATIONAL COAL-MINERAL INDUSTRIES GROUP, the state- owned coal producer known as Vinacomin, plans to sell as much as $500 million of bonds overseas to fund mining and energy projects, according to Deputy Chief Executive Officer Nguyen Van Hai.
FINLAND may sell five-year bonds denominated in dollars, the Finnish Treasury said in a document posted on its Web site.
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, 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: Sapna Maheshwari in New York at sapnam@bloomberg.net.
From Bloomberg published on Aug 31, 2010 4:19 PM GMT+0800
Subscribe to:
Comments (Atom)