European corporate bonds rose in average value on Friday as auto bond spreads tightened, and Denmark-based drug firm Nycomed planned a 400 million euro high-yield bond to fund a take-over. The FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 39.8 basis points more than similarly dated government bonds at 1608 GMT, 0.1 basis points less on the day. "It's a better market today but not that good - autos are outperforming," said a trader in London.
"We are see some short covering and some customer buying of Ford and GM," he said.
General Motors' 8.375 percent euro bond due in July 2033 traded seven basis points tighter, ending the day bid at 455 basis points over Bunds, he said. Ford's 4.875 percent euro bond due in January 2010 was four basis points tighter at 220 basis points over Bunds.
Denmark-based pharmaceuticals company Nycomed said it plans to sell a 400 million euro ($536 million) pay-in-kind note to fund its take-over by Nordic Capital Fund V.
The news led credit ratings agency Standard & Poor's to cut its corporate credit rating on the company by one notch to B from B+ and leave it with a negative outlook. It also cut its senior subordinated debt rating to CCC+ from B-.
Rival Moody's Investors Service also warned it might cut its senior implied rating of B1 and its issuer rating of B3 on Nycomed due to the change in ownership and the PIK note issue..
Nycomed said in a statement on its website that Nordic Capital Fund V has agreed to acquire a controlling interest in the company from a group of investors led by DLJ Merchant Banking, part of Credit Suisse First Boston's alternative capital division, and US private equity house, The Blackstone Group.
It said the transaction valued Nycomed at 1.8 billion euros.
The senior note, due September 2013 and callable after two years, is expected to be priced at the New York opening on Monday.
Proceeds of the issue will be used to refinance existing subordinated mezzanine notes, purchase shares from existing shareholders and pay for transaction fees, the source said.
S&P said the existing mezzanine notes totalled 50 million euros and paid a 16 percent coupon.
Credit Suisse First Boston and Goldman Sachs are managing the sale, the source said.
Also in the primary market, Rexel, the world's biggest electrical equipment supplier, sold a 600 million euro 10-year bond at par with a yield of 9.375 percent.
The final yield was in the middle of the range of 9.25 to 9.5 percent announced ahead of pricing. The banker said it equates to a spread of 565 basis points over the 3.75 percent German Bund due 2015.
Proceeds from the bond, being issued via Ray Acquisition SCA, will help pay for Rexel's acquisition from French retailer Pinault Printemps Redoute.
Comments
Comments are closed.