Valeant sweetens terms on M&A debt financing

Tue Jun 25, 2013 4:52pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Rachelle Kakouris

NEW YORK, June 25 (IFR) - Pharmaceuticals giant Valeant sweetened the terms on its proposed new loan and high-yield debt financing package, sources said Tuesday, as it looks to fund its USD8.7bn acquisition of Bausch & Lomb in an extremely jittery market.

Valeant also dropped a planned longer-dated note in favor of a shorter maturity tranche, in a nod to investor worries about duration risk at a time when interest rates have been spiking sharply.

The Canadian company was seen out with price guidance of 7.5% area on the eight-year non-call three tranche of the two-part bond offering, market sources said. That has risen steadily from initial whispers of around 6% early last week, as market nerves about the Fed eventually winding down its easy money policy have wreaked havoc on rates.

The B1/B rated senior unsecured notes will now also include 2018 notes, callable after two years, after Valeant scuttled its proposed 10-year non-call five notes.

Price talk on the five-year non-call two notes is currently around 6.75% area yield, the sources said.

The back-up in Treasury rates has quickly prodded the average yield-to-worst on the Barclays high-yield index higher. It hit 6.94% at close on Monday, up 81 basis points from 6.13% last Wednesday.

With the average yield-to-worst on the cusp of 7%, investors are beginning to view the current levels as a buying opportunity.

"Now it's looking attractive again," said one high-yield investor.   Continued...