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A host of borrowers tapped the debt markets this week amid speculation that some of the companies could be piling up cash for acquisitions, syndicate sources told dealReporter. Diageo (NYSE:DEO, A- /A3), Reinsurance Group of America (NYSE: RGA, A-/Baa1), IBM (NYSE: IBM,A+/A1), Woodside Finance (A-/Baa1), a subsidiary of Australia’s Woodside Petroleum (ASX: WPL), and Brazilian miner Vale Overseas (NYSE: VALE,BBB+/Baa2) are all bringing bond issues today, they said.
Diageo is bringing a USD 500m 5-year bond issue via Citigroup, Deutsche Bank and Morgan Stanley, the sources said. The notes were launched at 97bps, on top of guidance. The deal will not grow, one of the sources said.
“They are a very inquisitive company. They are likely to be in need of funds to acquire some assets,” said one of the sources. Diageo said on its conference call in August that it would be interested in Moet Hennessy at the right price.
Vale SA’s subsidiary, Vale Overseas Limited, is also issuing benchmark size 30-year senior unsecured notes that are guaranteed by Vale SA.
Price guidance on the offering was at 275bps, said one of the sources. Leads on the offering are Deutsche Bank, HSBC and JPMorgan.
Vale will be making an application to list the notes on the NYSE, according to one of the sources. Vale Overseas previously brought a USD 1bn 10-year bond in September via Goldman, HSBC and Santander.
Reinsurance Group of America is also bringing a USD 300m 10-year bond offering via Barclays and UBS, the sources said. The 10-year notes launched at 300bps, said one of the sources.
The company acquired ReliaStar’s US and Canadian group life, accident and health reinsurance business on 16 October. But it said it would fund the acquisition with its existing capital. Its acquisition, which is subject to regulatory approvals, will be structured as an indemnity coinsurance agreement and is expected to be effective 1 January 2010.
The company has some upcoming bond maturities, however. Its USD 200m 6.75% bond is due in December 2011.
IBM is also due with a 2-part bond offering consisting of 2-year floating rate notes and 3.5-year notes via Citigroup, HSBC and Morgan Stanley. Price guidance on the FRNs is at 3-month Libor plus 5bps and guidance on the 3.5-year notes is at 70bps, one of the sources said.
Woodside Finance is also in the market today with USD 500m 5-year notes via Citigroup, Deutsche Bank and JPMorgan, said the sources. Price guidance on the notes is between 237.5bps and 250bps, said one of the sources.
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