NEW YORK, June 24 (IFR) - Valeant Pharmaceuticals has
sweetened the terms on its proposed jumbo high-yield bond, as
the pharma giant tries to get a deal done in an extremely
unwelcoming issuance climate.
Valeant, having already sounded out investors on
the East Coast last week, met with junk bond investors on the
West Coast on Monday to pitch the USD3.225bn trade.
The two-tranche transaction is part of a USD9.3bn financing
package backing Valeant's USD8.7bn acquisition of Bausch & Lomb,
with senior unsecured notes due 2021 and 2023.
According to market sources, the shorter dated tranche -
which is expected to gain the most traction - is now being
touted around a yield level of 7% from initial talk in the 6%
range and then mid to high 6% late last week.
Meanwhile the average yield to worst on the Barclays
high-yield index backed up to 6.62% on Friday from 6.13% on
"I think it's going to be tough to get such a big deal under
way," said Gershon Distenfeld, director of high-yield debt at
"When people have to sell to meet redemptions in a very
illiquid market, their appetite to buy is not what it is in a
Goldman Sachs is lead-left bookrunner on the trade, with
Barclays, BAML, JPM, MS and RBC as joint books. The two tranches
are callable after three and five years respectively.
"My guess is that they will get this deal done but they will
have to pay up for it," said Mark McCabe of KDP Investment
Advisors, an independent provider of credit research and
"The acquisition doesn't close until September. They could
put the deal on hold and come back in a few weeks when the
market could be a little more receptive."
According to Lipper, a Thomson Reuters company, US
high-yield bond funds have suffered more than USD9bn of outflows
since May 22, when Federal Reserve Chairman Ben Bernanke first
publicly discussed slowing down the Fed's easy money policies.