Corporate Debt Issuance Tops $3.5 Billion Markita
April 27, 2011
Aetna Services led the pack with a four-part, $1.4 billion issue, while the World Bank came to market with a $1 billion 10-year global deal. About $500 million in federal agency debt also was priced. Aetna Services, a unit of Hartford, Conn., insurance holding company Aetna Inc., priced the deal through lead manager Merrill Lynch & Co.. The company will use proceeds of the issue to refinance short-term debt incurred during its acquisition of U.S. Healthcare. The deal was priced as $300 million of five-year notes at a yield spread of 0.46 percentage point above comparable Treasurys; $350 million of 10-year notes at a yield spread of 0.65 percentage point above Treasurys; $450 million of 30-year bonds at a yield spread of 0.88 percentage point above Treasurys; and $300 million of 40-year bonds with a put option in year eight at a yield spread of 0.45 percentage point above a comparable eight-year Treasury. A put is an option to sell a security at a specified price, usually within a limited period. Yield spreads on most of the tranches came in below or at the bottom of expectations. The issue, which is guaranteed by parent Aetna Inc., is rated single-A2 by Moody's Investors Services Inc. and single-A-minus by Standard & Poor's Ratings Group. Meanwhile, Sprint Spectrum's planned $650 million two-part debt offering, originally expected to price Tuesday, was likely to be delayed until at least Thursday. With a glut of telecommunications debt coming to market in recent weeks, a number of personal communications services and other wireless companies have been forced to sweeten debt offerings to include equity warrants or higher yields. Several issues have also either been pulled or delayed indefinitely due to adverse market conditions. But with Sprint Corp. and three powerful cable companies as its owners, Sprint Spectrum wasn't expected to face many difficulties. In the secondary market, yield spreads on TCI Communications debt tightened anywhere from 0.05 to 0.10 percentage point as investors continued to snap the bonds up after what was seen as a positive corporate earnings report released Tuesday. TCI's 7 7/8 debentures due 2026 were quoted at a yield spread of 2.22 percentage point over Treasurys. The yield spread is the difference in the yield of a given debt instrument and that of a similar-term Treasury issue, with a tightening of the spread suggesting a decreased perception of risk. Overall, investment-grade yield spreads were unchanged to a bit tighter.
VastPress 2011 Vastopolis
