VNU reworks bond sale by adding €200 mln note
The annual cost of insuring €10 million of VNU debt for five years using credit-default swaps rose 60 basis points yeseterday. €60,000, rose to a record 475 basis points, according to HSBC Holdings Plc. The new €200 million securities will be senior discount notes, and will have no coupon for the first five years, the banker said. The company will have the option to buy them back after five years, and the debt will have a final maturity of 10 years. Further details on the security weren't available. Moody's Investors Service last week rated the planned bonds Caa1, seven levels below investment grade, and Standard & Poor's rated them an equivalent CCC+. The outlook at Moody's is stable, indicating a change soon isn't likely. The outlook at S&P is negative. ABN Amro Holding NV, Deutsche Bank AG, Citigroup Inc., ING Groep NV and JPMorgan Chase & Co are managing the sale. (Credit-default swaps are used to bet on a company's creditworthiness or protect against non-payment of its debt. The buyer pays an annual fee and gets the full amount insured if the borrower defaults. In return, the swap seller gets the defaulted loans or bonds. Swap prices rise when creditworthiness worsens, and fall when it improves.) Marc Borkink, director of the VNU treasury department at the company's headquarters in Haarlem, the Netherlands, declined to comment. (Bloomberg)
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