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

To: Anthony Wong who wrote (693)	12/2/1998 1:59:00 PM
From: Anthony Wong	Respond to of 2539

Monsanto Sets Preliminary Yield Spreads on Debt Sale (Update1) Bloomberg News December 2, 1998, 11:01 a.m. ET Monsanto Sets Preliminary Yield Spreads on Debt Sale (Update1) (Adds comment by portfolio manager in 4th paragraph and compares Monsanto's spread levels to other similarly-rated industrial bonds in 5th paragraph.) New York, Dec. 2 (Bloomberg) -- Monsanto Co., a large agricultural biotechnology company, plans to sell $2.5 billion of note and bonds ranging in maturity from three to 30 years. The company is expected to sell its notes at the following yield spreads over Treasuries with comparable maturities: --$500 million of three-year notes at about 90 basis points --$500 million of seven-year notes at about 115 basis points --$500 million of 10-year notes at about 125 basis points --$500 million of 20-year bonds at about 135 basis points --$500 million of 30-year bonds at about 145 basis points Investors say the yield spreads are wider than similarly- rated industrial bonds. They say that's needed because of the sale's large size, the retrenchment in investor demand for corporate bonds the past two days, Monsanto's acquisitive trend. ''New large deals have typically been priced attractively enough to generate interest,'' said Wayne Schmidt, who helps manage $600 million of bonds at Advantus Capital Management in St. Paul. Plus, ''there's been a little give up in corporate bond spreads correlating with sell off in stocks.'' For existing 10-year industrial company notes with ratings the same as Monsanto's, the spread over Treasuries was 105 basis points, according to Bloomberg analytics. That's 20 basis points narrower than the spread proposed for the new 10-year Monsanto notes. The sale -- the biggest sale since Sprint Capital Corp. sold $5 billion of bonds Nov. 11. -- was delayed from mid-November until rating companies completed reviews of Monsanto. Standard & Poor's Corp. and Moody's Investors Service were reviewing Monsanto's ratings after its proposed merger with cash- rich American Home Products Corp. was canceled in October, leaving Monsanto to finance an extensive spending spree. With the AHP merger terminated, St. Louis-based Monsanto came up with a financing plan of its own. It outlined plans a few weeks ago to cut as many as 1,000 jobs and raise $5 billion through equity, debt and asset sales. S&P affirmed Monsanto's ''A'' rating last week and said it expects Monsanto's plans to sell some businesses and issue additional stock ''will lead to meaningful debt reduction in the near term.'' Moody's, on the other hand, lowered the company's rating one notch to ''A2'' because of ''the stressed nature of the balance sheet due to debt incurred primarily to finance acquisitions.'' The company, which makes genetically improved crops, drugs and nutritional products, has spent more than $8 billion the past two years to buy seed companies and other technology. Salomon Smith Barney and Goldman Sachs & Co. are managing the sale. --Kathleen Spillane in the New York newsroom (212) 318-2034/mq More News: MTC