Aero-engine maker Rolls Royce plans to launch a benchmark euro-denominated bond to refinance debt, lead managers for the deal said on Friday.
Benchmark deals normally total at least 500 million euros.
Supply so far this year in the corporate sector has been low, with many issuers having borrowed last year and volatility in the market discouraging new deals.
BNP Paribas, Citigroup and J.P. Morgan have been mandated to lead manage the transaction, which will have an intermediate maturity and will be launched following European investor presentations, subject to market conditions. An intermediate maturity is usually between five and seven years.
The bond will be documented under the issuer's euro medium term note programme and will carry a guarantee from Rolls Royce Group Plc.
Proceeds from the bond will be used to refinance existing debt. Rolls Royce Plc is rated Baa1 by Moody's Investors Service and BBB by Standard & Poor's.
The cost of insuring against a default by Rolls Royce was unchanged on the news of the planned new issue, a trader said. Around 0945 GMT, five-year default swaps were trading around 64.5 basis points, meaning it costs 64,500 euros a year to insure 10 million euros of Rolls Royce debt against default.
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