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Baxter Int’l on track to join low-coupon club (with IBM, Monsanto, et al)

Healthcare-equipment company Baxter International floated guidance in the T+85 area for 10-year notes and in the T+100 area for 30-year bonds, as it markets $750 million of SEC-registered senior debt to fund growth of its plasma-based-treatment business, sources said. Guidance ranges are five basis points at either side of those midpoints, and prints there would translate to among the lowest reoffer yields on record.

A print at the narrow end of talk would imply a reoffer yield below 2.5% for the 10-year notes, after just 10 other borrowers have placed bonds under that level, including seven in July (IBM, Bristol-Myers Squibb, Monsanto, Praxair, Estee Lauder, Northern Trust, and Schlumberger). IBM holds both the low 10-year coupon and reoffer with 1.875% notes placed on July 25 at T+65, or 2.05%, LCD data show.

The narrow end of talk for the 30-year issue points to a reoffer yield below 3.75%, after only three other borrowers have come in below that mark, including three in July. As liquid borrowers routinely garnered negative new-issue concessions at pricing, Bristol-Myers Squibb placed 3.25% notes due 2042 at a record-low 3.45% on July 26, Monsanto sold 3.6% bonds at 3.61% on July 9, and Estee Lauder matched a McDonald’s 3.7% coupon with 2042 bonds placed at 3.72%.

Bookrunners for the A+/A3/A offering are Deutsche Bank, Goldman Sachs, RBS, and UBS. The issues include change-of-control puts at 101.

Deerfield, Ill.-based Baxter International, which develops, manufactures and markets products for people with hemophilia, immune disorders, infectious diseases, kidney-disease trauma, and other chronic and acute medical conditions, broke ground on a new manufacturing facility near Atlanta this month as it seeks to build capacity in plasma-based therapies for chronic and life-threatening illnesses, targeting 1,500 workers and a total investment of more than $1 billion.

Despite material cash uses over the last several years, including share-repurchase activity in the $1-2 billion range and capital spending near $1 billion, the company is not a frequent visitor to the long-term debt markets, as it uses commercial paper backed by a $1.5 billion revolver to support operating needs.

Today’s offering is just the second long-term debt deal for the company since March 2010, after the company placed an upsized, $500 million offering of 1.85% notes due January 2017 last December at T+100. – John Atkins

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