Hi Grade: Qualcomm prints $10B bond offering as blockbuster deals mount; term sheet

Qualcomm (Nasdaq: QCOM) today printed a $10 billion, eight-part offering of SEC-registered senior notes, which matches its $10 billion, 12-month accelerated share-repurchase plan announced on April 22, as part of an overall $15 billion buyback authorization.

The debut deal represents the only long-term debt on the company’s balance sheet, after the issuer in March announced a $4 billion commercial-paper program, under which roughly $1.1 billion was outstanding as of March 29, according to regulatory filings.

The offering was also the seventh so far this year totaling $10 billion or more, all of which backed either M&A plays or share repurchases, including deals for Actavis ($21 billion), AT&T ($17.5 billion), AbbVie ($16.7 billion), Microsoft ($10.75 billion), Shell International Finance ($10 billion), and Oracle ($10 billion). Only Apple ($12 billion) met that threshold over the first five months of 2014, and there were only three offerings of $10 billion or more over all of last year, LCD data show.

As has been the case for many offerings through the underlying rate volatility over recent sessions, talk for the longer-dated Qualcomm tranches stuck closer to initial marketing levels than for the shorter offerings. Spreads for the 2018, 2020, 2022, and 2025 issues were set 10-15 bps through initial whispers, while the 2035 and 2045 bonds were set flat to slightly through respective whispers from T+160-165 and T+180-185.

San Diego, Calif.-based Qualcomm designs, develops, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, and the U.S.

The company last month lowered its fiscal 2015 revenue guidance, but it retained stable outlooks on the A+/A1 ratings profile at S&P and Moody’s. Those ratings date to March this year to mark the first new debt-rating assignments on the company since 1999.

“We expect the company’s revenues will be flat to slightly down year over year for fiscal 2015 and 2016, reflecting a challenging semiconductor purchasing environment from a concentrated set of wireless device clients and accelerating vertical integration by one of its clients, Samsung,” S&P stated today, after previously estimating low-single-digit revenue growth for the current fiscal year. “Nevertheless, we expect Qualcomm will maintain its leadership position in the mobile device semiconductor market and will continue to generate high margins on royalties from its patent portfolio.”

While Moody’s today said it expected Qualcomm to maintain a “very strong” liquidity profile, it noted that “domestic cash uses in the form of dividends and share buybacks will likely outstrip domestic cash generation,” which accounted for roughly half of total cash flow. Qualcomm aspires to return at least 75% of cash flow from operations less capital spending, on average, in dividends and share buybacks, but Moody’s said Qualcomm would exceed this target over the next two years.

“To support this more aggressive return of capital, Qualcomm will issue debt, although Moody’s expects adjusted debt to EBITDA will be less than 1.5x,” analysts said.

S&P last month noted that Qualcomm, on its quarterly earnings call, defended its intention not to separate its licensing and semiconductor products businesses, though it plans to continue to review the proposition, having raised the prospect of such an outcome in the past. S&P projected that a separation “could increase debt to EBITDA for Qualcomm above our 1.5x leverage trigger for a downgrade.”

Qualcomm on the call noted that the Korean Fair Trade Commission was conducting a new investigation of the company, which it believed primarily related to its licensing business. Terms:

Issuer Qualcomm Inc.
Ratings A+/A1
Amount $250 million
Issue SEC-registered senior notes
Coupon L+27
Price 100.000
Maturity May 18, 2018
Call nc-life
Px Talk Guidance and IPT: LIBOR equivalent of fixed-rate pricing level
Issuer Qualcomm Inc.
Ratings A+/A1
Amount $1.25 billion
Issue SEC-registered senior notes
Coupon 1.400%
Price 99.866
Yield 1.446%
Spread T+50
Maturity May 18, 2018
Call Make-whole T+10
Px Talk Guidance T+55 area (+/- 5 bps); IPT T+60 area
Issuer Qualcomm Inc.
Ratings A+/A1
Amount $250 million
Issue SEC-registered senior notes
Coupon L+55
Price 100.000
Maturity May 20, 2020
Call nc-life
Px Talk Guidance and IPT: LIBOR equivalent of fixed-rate pricing level
Issuer Qualcomm Inc.
Ratings A+/A1
Amount $1.75 billion
Issue SEC-registered senior notes
Coupon 2.250%
Price 99.920
Yield 2.267%
Spread T+70
Maturity May 20, 2020
Call Make-whole T+12.5
Px Talk Guidance T+75 area (+/- 5 bps); IPT T+80 area
Issuer Qualcomm Inc.
Ratings A+/A1
Amount $2 billion
Issue SEC-registered senior notes
Coupon 3.000%
Price 99.962
Yield 3.003%
Spread T+100
Maturity May 20, 2022
Call Make-whole T+15
Px Talk Guidance T+105 area (+/- 5 bps); IPT T+110-115
Issuer Qualcomm Inc.
Ratings A+/A1
Amount $2 billion
Issue SEC-registered senior notes
Coupon 3.450%
Price 99.649
Yield 3.493%
Spread T+120
Maturity May 20, 2025
Call Make-whole T+20 until notes are callable at par from three months prior to maturity
Px Talk Guidance T+125 area (+/- 5 bps); IPT T+130-135
Issuer Qualcomm Inc.
Ratings A+/A1
Amount $1 billion
Issue SEC-registered senior notes
Coupon 4.650%
Price 99.562
Yield 4.684%
Spread T+160
Maturity May 20, 2035
Call Make-whole T+25 until notes are callable at par from six months prior to maturity
Px Talk Guidance T+165 area (+/- 5 bps); IPT T+160-165
Issuer Qualcomm Inc.
Ratings A+/A1
Amount $1.5 billion
Issue SEC-registered senior notes
Coupon 4.800%
Price 99.464
Yield 4.834%
Spread T+175
Maturity May 20, 2045
Call Make-whole T+30 until notes are callable at par from six months prior to maturity
Trade May 13, 2015
Settle May 20, 2015
Px Talk Guidance T+180 area (+/- 5 bps); IPT T+180-185
Notes Proceeds for capital returns and general corporate purposes



Burger King/Tim Hortons selling $1.25B in bonds

Burger King/Tim Hortons stepped in the market today with an anticipated $1.25 billion offering of first-lien senior secured notes via a bookrunner group led by J.P. Morgan, according to sources.

Proceeds from the bond issue, along with cash on hand, will be used to repay roughly $1.5 billion of existing term loan B borrowings.

The original $6.75 billion term loan B was syndicated in September via J.P. Morgan, Wells Fargo, and Bank of America Merrill Lynch, along with a $2.25 billion offering of second-lien notes, proceeds of which backed the fast-food chain’s acquisition of Tim Hortons. Those 6% notes due 2022 closed yesterday at 102.5 to yield 5.35%, and last week were a point higher at 103.5 to yield 5.1%, trade data show.

Burger King and Tim Hortons brand names are owned by Restaurant Brands International, which trades on the New York Stock Exchange under the ticker QSR with an approximate market capitalization of $19.35 billion. – Joy Ferguson/Kerry Kantin


Hexion, Guitar Center bonds advance after 1Q results

Earnings season is not always kind to stressed credits, but results out of both Hexion and Guitar Center this morning boosted bond prices in an otherwise firm secondary high-yield market today. Hexion 8.875% intermediate-lien notes due 2018 traded up three points, to 94, while Hexion 9% springing-lien notes due 2020 changed hands four points higher, at 82, trade data show.

The Apollo-controlled resins concern reported a 17% decrease in net sales year over year, at $1.08 billion in the first quarter, but an increase by 6% in segment EBITDA, to $127 million, or an increase of 13% adjusting for currency fluctuations, according to a company statement. Management cited increased demand for specialty epoxy products and successful execution of cost-savings efforts.

The company highlighted $763 million of total pro forma liquidity as of March 31, as well as the placement of a $315 million issue of 10% first-lien notes due 2020 and an ABL facility amendment in April. That paper changed hands today at 106.313, versus 105 yesterday, and par issuance on April 2, trade data show.

Bonds backing Guitar Center also gained this morning after results were disseminated privately. The 6.5% secured notes due 2019 traded at 92.25, versus 88.75 prior to the report, while the unsecured 9.625% notes due 2020 surged nine points and changed hands at 87.5, trade data show.

As the bonds were issued under Rule 144A for life, results remain private for the Bain Capital- and Ares Management-controlled retailer. Nonetheless, market sources relay that while revenue showed no improvement, EBITDA gained roughly 35% and gross product margin expanded nearly 1%.

Recall that the secured notes were in the mid 80s and unsecured notes were in the low 60s last fall ahead of third-quarter results. Bonds were wobbly at the time, just as the company also announced the appointment of Darrell Webb, its new president and chief executive officer, after former CEO Mike Pratt resigned. (See “Guitar Center bonds edge higher ahead of earnings call with new CEO,” LCD News, Nov. 19, 2014.

As reported, Guitar Center is facing an uphill battle as comparable same-store sales are down and the company struggles to compete with online providers. The aforementioned bonds were the company’s last tap of the market as part of a broad recapitalization effort one year ago. The 6.5% notes had priced at 98.943, to yield 6.75%, while the 9.625% notes came at a discount of 98.875 at the time, to yield 9.875%.

The financing helped repay in full vintage-2007 buyout loans and some bonds, while a portion of old cash-pay opco bonds were swapped into equity, and all old holdco PIK notes were swapped into holdco equity. Most were held by Ares, so Ares essentially cashed in to become a joint sponsor with Bain. At the time, S&P lowered the credit to CC, from CCC+, on the transaction, which was essentially a distressed exchange, followed by an upgrade to B- on the completion of the exchange. S&P estimated the company’s total debt to EBTIDA, including preferred stock, was close to 8x at fiscal year-end December 2014. – Matt Fuller

Follow Matthew on Twitter @mfuller2009 for leveraged debt deal-flow, fund-flow, trading news, and more.


Colt extends deadline on deeply distressed bond swap as just 5% join

Colt Defense has extended by another week, to midnight EDT on May 18, the deadline to participate in a deeply distressed uptier exchange offer on its $250 million issue of 8.75% unsecured notes due 2017 after just 5.1% of bondholders put in for the transaction, according to a company statement.

Under terms of the deal, bondholders are offered an uptier-exchange at deeply distressed levels into new 10% junior-lien notes due Nov. 15, 2023. The consideration offered under terms of the deal is at a pro rata 35% of par, inclusive of a 5% of par consent payment, for each $1,000 face-value Colt bond issue, according to the filing.

Closing is conditioned upon participation by no less than 98% of bondholders, and just $12.7 million, or 5.1% of the series, put in for the exchange as of last night’s deadline. As reported, the deal is an effort to restructure its balance sheet and put the gun maker “in a better position to attract new financing in the years to come,” according to a corporate filing. Moreover, the transaction is an effort to “address key issues relating to Colt’s viability as a going concern,” the filing shows.

That said, the company is also soliciting the consents from bondholders to approve a prepackaged plan of reorganization under Chapter 11 in the event that the debt swap fails. In that scenario, old notes would be cancelled and bondholders would receive their pro rata share of the new notes at the prescribed ex-consent-payment level, or at 30% of par, the filing shows.

As reported, launch of the distressed swap comes roughly a month after the company announced it reached agreements with its two loan agents to provide an extension of the deadline for the company to deliver its annual results to June 14, according to an SEC filing. The waiver came with a variety of amendments to a $33 million loan with its “rescue-loan” agent Cortland Capital Market Services and a $70 million “lifeline” term loan facility with Wilmington Savings Fund Society and Morgan Stanley (see “Colt Defense nets loan waivers to extend 10-K deadline to June 14,” LCD News, April 9, 2015).

Colt’s sole outstanding bond issue – the $250 million series of 8.75% notes – has wallowed around 30 in recent weeks and traded flat, or without accrued interest, according to sources. Market sources peg Street quotes at 27/29 this week.

As reported, the company recently hired turnaround and advisory firm Mackinac Partners as restructuring financial advisor and appointed Mackinac’s Keith Maib to serve as chief restructuring officer.

Colt Defense is rated CC/Caa3. The company was split off from 160-year-old Colt’s Manufacturing in 2002 and serves the law enforcement, military, and private security markets worldwide. The two eventually recombined. The company is controlled by Sciens Capital Management, and Blackstone Group joined with a $30 million equity stake alongside a dividend recapitalization in 2007. – Matt Fuller/Rachelle Kakouris

Follow Matthew on Twitter @mfuller2009 for leveraged debt deal-flow, fund-flow, trading news, and more.



Bankruptcy: Patriot Coal files Ch. 11 for second time; in “active” talks on sale

Patriot Coal filed for Chapter 11 in bankruptcy court in Richmond, Va., the company announced this morning. It is the company’s second bankruptcy filing in three years, the prior one coming on July 9, 2012.

In a statement, the company said it was “engaged in active negotiations for the sale of substantially all of the company’s operating assets to a strategic partner,” adding it was also “engaged in ongoing discussions with key stakeholders as it evaluates a range of strategic alternatives to maximize the value of its assets.”

The company did not identify the strategic partner.

The company said it “intends to complete its review of strategic alternatives and present a value-maximizing restructuring plan to the court as quickly as possible.”

The company said it has $100 million in DIP financing led by a consortium of the company’s secured debt holders, and that the DIP, combined with cash generated from ongoing operations, would “provide sufficient liquidity to support the business during the restructuring process.”

As reported, the company emerged from its prior Chapter 11 proceeding on Dec. 18, 2013 with $576 million in exit financing led by Barclays Bank PLC and Deutsche Bank Securities and a $250 million rights offering backed by Knighthead Capital Management. The exit financing included a $250 million term loan, a $125 million asset-backed revolver, and a $201 million letter of credit facility.

In addition, a key to the company’s prior reorganization plan was a settlement among the company, the United Mine Workers of America, and Arch Coal (which helped create Peabody via a spin-off and merger of unit Magnum Coal in 2008) with respect to the funding of health and retirement plans for the company’s retirees.

Initially, the company had offered the union a 35% stake in the reorganized company to use to finance retiree benefits, but the union rejected that scheme. In the settlement, the union gave up the proposed ownership stake and Peabody, for its part, agreed to contribute more that $400 million to the UMWA-sponsored Voluntary Employee Beneficiary Association trust – $90 million in 2014, $75 million in 2015 and 2016, and a final payment of $70 million at the beginning of 2017. Patriot agreed to pay $15 million to the VEBA in 2014, with an additional $60 million paid into the fund over the following three years, in addition to production-based royalty payments that could provide more than $15 million, and Arch agreed to pay a smaller sum to the VEBA, as well (see “Patriot Coal settles with Peabody, Arch, files amended plan,” LCD, Oct. 10, 2013 $$). – Alan Zimmerman


Rosetta Resources bonds jump on bid from higher-rated Noble Energy

Bonds backing Rosetta Resources traded higher today after news Noble Energy would buy the company and assume $1.8 billion of debt in an all-stock transaction.

Rosetta Resources 5.875% notes due 2024 changed hands at 109/110 after the announcement today, versus 99.5-99.75 on Friday, according to trade data and market sources.

High-yield investors were focused on new issuance today, with a slew of new deals announced this morning as first-quarter earnings season draws to a close. The HY CDX 24 index was marginally lower at midday today, at 107.07/107.15, versus a 107.25 context on Friday, off six-week lows touched last week.

Noble Energy, which is rated BBB/Baa2, unveiled plans to buy all the common stock of Rosetta Resources, rated BB-/Ba3, in a $2.1 billion transaction.

Rosetta shareholders will receive 0.542 of Noble Energy share per Rosetta common share. Shares of Rosetta Resources, which trade on NASDAQ and is traded under the ticker symbol ROSE, soared 26% by midday today, to $24.38.

Operations of Noble Energy, an oil-and-gas exploration-and-production company, are mainly in the DJ Basin and Marcellus Shale, the Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa.

The two companies will complement each other, a joint company statement said. Rosetta Resources owns around 50,000 net acres in the Eagle Ford area in South Texas, and 56,000 net acres in the Permian Basin in West Texas.

“Noble Energy anticipates a compounded annual production growth rate from these assets over the next several years of approximately 15 percent, generating positive free cash flow on an annual basis,” the statement said.

Shares of Noble Energy, which trade on NYSE under the ticker symbol NBL, sank $3.27 after the news, to $45.85.

Rosetta Resources placed $500 million of 5.875% notes due 2024 at par in May 2014. Proceeds were used to repay revolver debt and to fund general corporate purposes. J.P. Morgan, Wells Fargo, BMO, and Mitsubishi were bookrunners. – Abby Latour

Follow Abby on Twitter @abbynyhk for middle-market deals, leveraged M&A, BDCs, distressed debt, private equity, and more.


High grade bond volume exceeds $50B this week, for third time ever

After one of the biggest two-session outbursts of supply on record Tuesday and Wednesday, seven more issuers piled into the primary market on Thursday, including deals for Boston Scientific ($1.85 billion), Anglo American Capital ($1.5 billion), Chevron Phillips Chemical ($1.4 billion), EnLink Midstream Partners ($900 million), Bank of America ($600 million of “green” bonds), Puget Energy($400 million), and Weingarten Realty Investors ($250 million).

This week’s torrent of bond offerings backing aggressive corporate fiscal policies resulted in a rare weekly issuance total north of $50 billion, against the backdrop of rapidly increasing absolute costs, LCD data show. Indeed, that $50-billion threshold has only been crossed twice before, including when $60 billion was printed over the week ended Sept. 13, 2013 – largely on the strength of a record-smashing, $49 billion deal for Verizon Communications – and $51.7 billion was placed over the first week of March this year.

This week’s volume also pushed the 2015 issuance total to roughly $463 billion, or 23% ahead of the 2014 pace, and 26% ahead of the total over the same period in 2013.

(Note: LCD totals exclude sovereign, quasi-sovereign, supranational, preferred and hybrid-structure, and remarked deals.)

Corporate treasurers are clearly indicating a sense of urgency to lock in funds, as underlying rates spiral higher, including through shocking bouts of intraday volatility, as was displayed in trades in the 10-year U.S. Treasury benchmark on Thursday morning.

Apple’s $8 billion deal this week perhaps most dramatically underscored the shift higher in absolute costs for borrowers this year. Coupons were printed on May 6 at 2% for five-year notes at T+45, 3.2% for 10-year notes at T+100, and 4.375% for 30-year bonds at T+140, or 45-92.5 bps more than since it placed, in early February this year, 1.55% five-year notes at T+42, 2.5% 10-year notes at T+85, and 3.45% 30-year bonds at T+125, as part of a $6.5 billion offering.

Pitching long-dated debt exposure to investors has been complicated after the average yield across the long-dated industrial component of the Barclays U.S. high-grade index climbed to a 12-month high of 4.76% as of Wednesday, reflecting a move up of half a percentage point in less than three weeks. The category posted a sharp total-turn loss of 3% for the month-to-date through Wednesday, and 5% over the previous three months.

But curve-spanning deals continue to mount, as borrowers scramble to lock in funds for M&A and direct shareholder returns. Including today’s deals for Boston Scientific and EnLink Midstream Partners, M&A-driven deals accounted for nearly $32 billion of issuance volume, or 57% of this week’s issuance total through Thursday.

Meantime, Apple this week placed another blockbuster debt backing its recent material increase in buybacks and dividends – following big deals last week for Oracle and Amgen for the same purposes – while Chevron Phillips Chemical and Puget Energy locked in funds in part for special distributions.  – John Atkins



Walter Energy to pay high yield bond coupons as revamp talks continue

Walter Energy will make interest payments under its indenture agreements with holders of its 9.5% senior secured notes due 2019 and the 8.5% senior notes due 2021, the company announced last night.

As reported, on April 15 the firm exercised the 30-day payment grace period under the indentures, saying it was not a liquidity issue but rather the company was “working with its debtholders to establish a capital structure that will position the company to weather a highly competitive and challenging market.” (See “Walter Energy skips two April 15 bond coupons amid reorg talks” $$).

In last night’s announcement the company reiterated both of those points, saying it would “continue to engage in such discussions” with debtholders, noting that it had roughly $435 million of cash and investments as of March 31.

However, it is worth noting that the company warned in a filing with the Securities and Exchange Commission on May 5 that there was substantial doubt about its ability to continue as a going concern, saying, “Our cash flows from operations were insufficient to fund our capital expenditure needs for 2014 and 2013 and we expect this trend to continue in 2015. If market conditions do not improve, we expect our liquidity to continue to be adversely affected.” (See “Walter Energy debt languishes at lows after going concern warning” $$). – Alan Zimmerman


Apple sets $8B bond offering in 4th buyback-driven deal since April 2013

apple logoApple has launched an $8 billion, seven-part offering of SEC-registered senior notes across $250 million of floating-rate notes due May 12, 2017 at L+5 and $750 million of same-dated fixed-rate notes at T+30; $500 million of five-year FRNs due May 6, 2020 at L+30 and $1.25 billion of same-dated fixed-rate notes at T+45; $1.25 billion of seven-year notes due May 13, 2022 at T+75; and $2 billion each of 10-year notes due May 13, 2025 at T+100; and 30-year bonds at T+140, sources said.

The company has now launched $43.5 billion of long-term, U.S. dollar-denominated debt offerings since April 30, 2013, backing massive capital returns to shareholders.

Bookrunners for the AA1/AA+ offering are BAML, Goldman Sachs, and J.P. Morgan. Proceeds are earmarked for general corporate purposes, including stock repurchases and the payment of dividends under the recently expanded capital-return program, funding for working capital, capital expenditures, and acquisitions and repayment of debt, according to regulatory filings.

Initial whispers started 5-10 bps wider, including in the areas of L+15 and T+40, and, for the five-year issues, in the areas of L+35-40 and from T+50-55. Initial whispers for the longer-dated issues started in the areas of T+85 for seven-year notes, T+110 for 10-year notes, and T+150 for 30-year bonds.

Bondholders exposed to Apple and ratings agencies assessing the company’s credit profile indicated only modest concern after the company on April 27 boosted and extended its capital-return initiatives from already lofty levels against the backdrop of record-high cash holdings.

Apple in early February placed a $6.5 billion offering, following an upsizing from $5 billion, to mark its third blockbuster bond offering in as many years as shareholder rewards mounted.

Apple’s 3.45% 30-year bonds due Feb. 9, 2045, which were priced at T+125 as part of that latest offering, changed hands this morning at T+128, or little changed since the start of the month, trade data show. Trades in the 2.5% 10-year issue due Feb. 9, 2025 were reported this morning in the T+90 area, or little changed net of the last month, from pricing on Feb. 2 at T+85.

Apple previously placed a $12 billion offering in late April 2014, after it printed a $17 billion deal exactly one year earlier, the latter reflecting a record-setting total for a corporate bond offering at the time of pricing. That latter deal remains tied for fourth on the list of biggest deals ever printed, LCD data show.

Apple now targets $200 billion of cumulative buybacks and dividends through March 2017, from the prior plan – which dates to August 2012 – for $130 billion of returns through the end of this year. The new target reflects a $50 billion boost to its share-repurchase authorization, raising the total amount to $140 billion, and an 11% increase of the quarterly dividend payout, to $0.52 per share.

“While most of our program will focus on buying back shares, we know that the dividend is very important to many of our investors, so we’re raising it for the third time in less than three years,” Apple CEO Tim Cook said in a statement last month. The company has said it intends to boost dividend payouts on an annual basis going forward, according to ratings agencies.

For reference, the company, from April 2012 through March this year, bought back roughly $80 billion of its shares under the buyback authorization, which after the upward revision now leaves roughly $60 billion of authorization through March 2017. It paid out more than $32 billion in dividends over the same trailing period.

Standard and Poor’s and Moody’s on April 28 said the upward revisions for shareholder rewards do not affect current AA+/Aa1 ratings, respectively, and stable outlooks.

S&P noted “strong” second-quarter earnings, including a 27% year-to-year rise in revenue, to $58 billion, a slight rise in adjusted EBITDA margin, $65 billion of free operating cash flow over the last 12 months, and a record-high $194 billion balance of cash and investments at the end of the period. “iPhone sales rose 40% year over year and made up a record 69% of total revenues during the quarter, due in part to declining iPad sales and slower growth in services and other products,” S&P analysts said today.

“Despite the increase in the capital return program, the company will maintain a significant net cash position, and we view its financial policy as conservative,” S&P added. “While we expect total shareholder returns to moderately exceed discretionary cash flow on occasions, robust overall cash generation affords the company the flexibility to return large amounts of cash to shareholders without detracting from the overall credit quality.” – John Atkins


Viking cruises drives by high yield bond mart with $250M offering

viking cruises logoViking Cruises this morning announced a $250 million offering of senior notes via joint bookrunners Wells Fargo, Bank of America, and Credit Suisse, according to sources.

An investor call is scheduled for 11:30 a.m. EDT, with pricing expected this afternoon, sources say.

The pitch is for a 10-year (non-call five) structure, and expected ratings are B3/B+. Proceeds are targeting general corporate purposes, including working capital, capital expenditures, debt repayment, and the acquisition of river vessels or ocean cruise ships.

Viking’s last tap of the market was a $275 million add-on to its 8.5% senior notes due 2022, which is its longest dated existing paper. That issue last traded at 111.5 to yield 5%, trade data show. Proceeds from that issue were used to fund a $115 million investment in a vessel and redeem the issuer’s $175 million issue of 8.625% PIK toggle notes due 2018. Recall the PIK toggle notes had been issued in 2013 to fund a dividend.

Woodland Hills, Calif.-based Viking Cruises is a river cruise line offering cruises along the rivers of Europe, Russia, China, Southeast Asia, and Egypt. – Joy Ferguson