UPDATE 1-Valeant increases pricing terms on M&A debt deal

Tue Jun 25, 2013 5:10pm EDT
 
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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, expected to price on Thursday, 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.

Books are expected to close at end of business on Wednesday.

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.   Continued...