Private Market Notebook: Week of Oct. 19th

October 23, 2009

*New issuance activity has been steadily increasing in the private placement market over the past few weeks. Many sources attribute the quickened pace of issuance to the fact that investors are scrambling to do deals as the year winds to a close.

“Many [buyside shops] are still under-invested in privates, and we’re getting toward the end of the year,” said one private placement agent. “Nobody wants to explain to their boss why they have money they still haven’t put to work,” he said.

Other sources said that steady volume in the public bond market and the continued tightening of new issue spreads in the private market have drawn issuers out of the woodwork as they too try to get funds or refinance before the year ends.

*Barclays Capital and RBS Greenwich Capital are heard to be on the way to market with a private placement for repeat-issuer Britvic. The U.K.-based beverage bottling company last tapped the market with a $450 million private placement via the same duo of agents back in January 2007. That deal was nearly three-times upsized and priced in seven-, 10-, and 12-year tranches at 95, 105, and 115 basis points over Treasurys, respectively.

*Banc of America Securities Merrill Lynch recently priced its deal for electricity distributor Powercor Australia. The deal was launched at $250 million in size, but finished at $275 million. The company took five- and seven-year paper at a spread of 190 basis points over Treasurys. Powercor is rated ‘A3’ by Moody’s Investors Service, and ‘A-’ by Standard & Poor’s.

*Repeat issuer Chemring Group plc also got private funds via BASML over the past week. The U.K.-based defense systems company did a $280 million private placement in seven- and 10-year maturities at a spread of 225 basis points over Treasurys.

Chemring’s last deal in the private market was a $150 million placement via Merrill Lynch back in October 2007. The deal priced in a single 10-year bullet at 180 basis points over Treasurys.

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