Valeant to price $1 billion eight-year secured notes on Monday backing tender offer

By Paul A. Harris

Portland, Ore., Oct. 2 – Valeant Pharmaceuticals International, Inc. plans to price $1 billion of senior secured notes (expected ratings Ba3/BB-) in a quick-to-market Monday trade, according to market sources.

The deal is shaping up with yield in the 5¾% area, according to a trader, who added that a debt capital markets transaction had been pretty well advertised and the deal is expected to generate pretty good demand.

The Laval, Quebec-based specialty pharmaceutical company plans to use the proceeds to fund its concurrent tender offer for three series of notes set mature in 2020: the 7% senior notes, the 6 3/8% senior notes and the 5 3/8% senior notes.

Ahead of the tender and sale of new notes there were better buyers of Valeant bonds due in 2021 and 2023, possibly among investors who anticipate that it may become a challenge to retain exposure to the name, the trader said.

The perception in the market is that investors have regained a level of comfort in the credit trailing recent asset sale and deleveraging news, the source said.

Citigroup Global Markets Inc. is the left bookrunner for the Rule 144A and Regulation S for life offering. Barclays, Deutsche Bank Securities Inc., DNB Markets, Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBC Capital Markets LLC are the joint bookrunners.

HSBC is the senior co-manager. TD Securities is the co-manager.

The notes become callable after three years at par plus 50% of the coupon and feature a 101% poison put.

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