Dec. 7 （Bloomberg） -- Novelis Inc., the U.S.-based aluminum unit of India's Hindalco Industries Ltd., is marketing debt as company bond sales more than tripled from the corresponding day last week.
Novelis plans to sell $2.5 billion of 7- and 10-year notes, according to a person familiar with the transaction. The debt will be issued as soon as Dec. 10, said the person, who declined to be identified because terms aren't set.
Company bond sales rebounded last week after a drop in issuance during the five days ended Nov. 26, as the European Central Bank extended an emergency loan program and President Jean-Claude Trichet pledged to fight "acute" financial market tensions. Issuance of $7.33 billion yesterday compares with $2 billion on Nov. 29, and $23.4 billion for all of last week, according to data compiled by Bloomberg.
"Even with the uptick in volatility we've had over the last couple of weeks, financing costs are still very attractive, particularly when you look at them on a historical basis," said Andrew Karp, head of investment-grade debt syndicate for the Americas at Bank of America Merrill Lynch.
Karp estimated there will be about $30 billion of investment-grade issuance this month, mainly in the first half.
The extra yield investors demand to own investment-grade corporate bonds instead of Treasuries was unchanged at 179 basis points yesterday, while absolute yields rose 6 basis points to 4.05 percent, according to the Bank of America Merrill Lynch U.S. Corporate Master index.
Novelis Refinancing
Novelis plans to use its bond offering along with borrowings under a $1.5 billion secured bank loan to refinance debt and pay for a $1.7 billion distribution to its parent, the Atlanta-based company said in a Nov. 30 statement.
High-yield corporate bond spreads widened 3 basis points to 595 basis points yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. Yields on the debt fell 4 basis points to 7.96 percent.
High-yield, or junk, debt is rated below Baa3 by Moody's Investors Service and BBB- by Standard & Poor's. A basis point is 0.01 percentage point.
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