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Biotech / Medical : Monsanto Co. -- Ignore unavailable to you. Want to Upgrade?

To: Dan Spillane who wrote (614)	11/25/1998 1:29:00 PM
From: Anthony Wong	Respond to of 2539

Corporate Bonds: Seagram, Monsanto Plan Sales of $2 Bln or More Bloomberg News November 25, 1998, 9:56 a.m. PT New York, Nov. 25 (Bloomberg) -- Seagram Co. and Monsanto Co. are both planning to sell at least $2 billion of bonds as strong demand and low interest rates lure companies. Demand has been so brisk recently that several borrowers increased their sales, many new issues gained in secondary trading and a handful of companies tapped the market several times in a matter of weeks. What's more, companies that delayed sales or those that probably couldn't sell bonds a few months ago are now getting a warm reception. Cendant Corp., which admitted accounting fraud at one of its units seven months ago, found ready buyers for $1.55 billion of bonds yesterday, more than triple the amount originally expected. ''The market has come a long way, very quickly,'' said Jeff Payne, who helps manage $2 billion of fixed-income assets at Denver Investment Advisors. The Cendant bonds, whose yield spread over Treasuries narrowed as much as 5 basis points in secondary trading, were spread among about 100 buyers, according to Chase Securities Inc., which helped manage the sale. The eager reception for the bonds was seen by some as a sign that investors expect the company to recover from the accounting debacle that clobbered its stock and wounded its reputation. Even so, the company had to offer fatter yields than other companies with similar ratings. ''One investor said 'you have headline risk and I want to be paid for it.' That's evident in the pricing,'' said Henry Silverman, chairman of Cendant. Parsippany, New Jersey-based Cendant, a franchiser of travel and real-estate businesses, sold $1.15 billion of five-year notes at a yield of 7.792 percent, or 312 basis points more than Treasuries. CSX Corp., a transportation company, sold lower-rated five-year notes Monday at a yield 123 basis points more than Treasuries. Cendant's bonds are rated ''Baa1'' by Moody's Investors Service, or one notch higher than CSX. Both are rated ''BBB'' by Standard & Poor's Corp. Seagram's Sale Among expected sales, Seagram Co., the entertainment and beverage company, plans to sell $2 billion of debt with various maturities during the second week of December, investors said. The sale would come as Seagram prepares to buy Polygram NV, the world's largest music company, for $10.4 billion by the end of next month. Montreal-based Seagram is expected to fund that transaction with a mix of its stock, debt and proceeds from the sale of some assets such its Tropicana fruit juice division. Expectations that Seagram will carry a higher debt load after the Polygram purchase led two major ratings companies last month to cut their ratings on the company's debt. S&P and Moody's both cut their ratings four notches on about $3 billion of Seagram debt to their lowest investment-grade category. The ratings companies said they were concerned about the potential affect of a slowing U.S. economy on Seagram's profitability and ability to pare its debt quickly. Seagram's senior debt is rated ''Baa3'' by Moody's and ''BBB- '' by S&P. Monsanto's Ratings Monsanto, a large agricultural biotechnology company, is expected to sell $2.5 billion of bonds next week. The company had delayed its sale because it wanted to get its ratings -- which had been under review by both Moody's and S&P -- confirmed. S&P affirmed Monsanto's ''A'' credit rating earlier this week. The rating company said it expects that Monsanto's recently announced plans to sell some businesses and issue additional stock ''will lead to meaningful debt reduction in the near term and bolster the financial profile that has been stretched by a series of mostly debt-financed acquisitions.'' . Moody's lowered the company's rating one notch to ''A2'' last week, concluding a review which began in May. The downgrade ''reflects the stressed nature of the balance sheet due to debt incurred primarily to finance acquisitions,'' Moody's said. Investor demand for corporate debt, which evaporated from August to early October, revived after three interest rate cuts by the Federal Reserve eased concerns that the economy would weaken enough to hurt corporate credit ratings. --Kathleen Spillane in the New York newsroom (212) 318-2034 and More News: MTC