Bloomberg News

HeidelbergCement Said to Raise $400 Million in High-Yield Bonds

September 28, 2011

Sept. 28 (Bloomberg) -- HeidelbergCement AG raised 300 million euros ($408 million), according to a person with knowledge of the deal, in the second sale of junk-rated bonds in Europe this month.

The world’s third-largest maker of cement and concrete priced the notes due December 2018 to yield 9.625 percent, according to the person familiar, who declined to be identified before the transaction is completed. That compares with an average of about 9.5 percent on similarly rated securities in Bank of America Merrill Lynch’s Euro High Yield, BB Rated index.

Sales of high-yield bonds have dried up as investors, concerned that Greece may roil markets by defaulting, shun all but the safest securities. Money managers are holding cash to meet the demands for redemptions they anticipate should there be a sovereign default while potential issuers shy away from the yields they will be asked to pay.

“You have to be good to get a deal away at present,” said Paul Owens, who helps manage the equivalent of about $8.2 billion as co-head of research at Avoca Capital Holdings Ltd. in London. “HeidelbergCement has been deleveraging the balance sheet and shown it can get good results in a bad market.”

The Heidelberg, Germany-based company is graded Ba1 at Moody’s Investors Service, the top speculative-grade rating, and a step lower at BB at Standard & Poor’s. Fresenius Medical Care AG, which has the same grades from the ratings firms, on Sept. 8 said it priced bonds in dollars and euros to yield 6.75 percent.

HeidelbergCement has 1.09 billion euros of bonds coming due in January, according to data compiled by Bloomberg.

BNP Paribas SA, Banca IMI SpA, Citigroup Inc., Deutsche Bank AG, ING Groep NV, LBBW, Mediobanca SpA and Royal Bank of Scotland Group Plc are managing the deal.

PSA Peugeot Citroen, Europe’s second-biggest carmaker, raised 500 million euros in a sale of 6.875 percent bonds yesterday. The company is rated an investment-grade Baa3 at Moody’s and step lower at BB+, the top junk level, at S&P. The bond due 2016 was rated Baa3 by Moody’s yesterday and hasn’t been graded by S&P.

--With assistance from Ben Martin and Hannah Benjamin in London. Editors: Michael Shanahan, Andrew Reierson

To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net


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