Chile retail giants surge on reports of alliance

(Updates trading price, adds background)

NEW YORK, Jan 17 (Reuters) - Food services and uniform rental company Aramark Corp. RMK.N on Wednesday sold $1.78 billion of notes to help fund a buyout by its management and a group of private investors, according to a market source familiar with the sale.

The sale was well oversubscribed, helped by confidence that Aramark's steady revenues will help it improve its balance sheet over time after taking on debt for the buyout, investors looking at the deal said.

A spokeswoman for Aramark declined to comment on the private sale.

The sale included $500 million in eight-year floating rate notes with a coupon rate of 3.50 percentage points over the three-month London interbank offered rate.

It also included $1.28 billion in eight-year senior notes yielding 8.5 percent, or 3.75 percentage points over U.S. Treasuries.

Aramark's high-yield offering attracted about $12 billion in orders, a market source said.

In a sign of strong demand, the eight-year notes rose by more than two percentage points, to a bid of 102-1/8 cents on the dollar and an offer of 102-1/4 cents, a trader said.

Philadelphia-based Aramark, which provides food to colleges, stadiums, businesses and convenience stores, in August accepted a $6.3 billion buyout offer from a group led by its chairman and CEO, Joseph Neubauer, and several private equity firms.

Its debt sale came at a time of strong demand for high-yield bonds overall, as stable interest rates and plentiful liquidity in the financial markets bolsters risky assets of all kinds.

"There's no fear of the economy rolling over, so given that, and given where Treasury rates are, anything that provides extra income is a welcome relief," said Robert Grimm, co-head of the high-yield group at J. Giordano Securities in Stamford, Connecticut.

On average, high-yield bonds now yield about 7.66 percent, according to Merrill Lynch data, compared with just 4.79 percent for benchmark 10-year Treasury notes US10YT=RR.

The joint lead managers on the sale were JP Morgan and Goldman Sachs.

Reuters contracts with Aramark for its cafeteria services at its headquarters in New York, according to an Aramark spokesman.

(Additional reporting by Caryn Trokie)

((Reporting by Dena Aubin; editing by Jonathan Oatis; Reuters Messaging: dena.aubin.reuters.com@reuters.net; +1-646-223-6325)) Keywords: ARAMARK NOTES/SALE

(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN17341701