Microsemi Corp. is leading U.S. companies this week in seeking $7.69 billion in leveraged loans as investors seek the steepest discounts to buy the debt since the third quarter of 2009.
Microsemi, a maker of microchips for the aerospace and defense industries, is proposing to sell an $800-million term piece to back an acquisition at 97 cents to 98 cents on the dollar, reducing proceeds for the company and increasing the yield for investors. DigitalGlobe Inc. is willing to sell a $500 million financing at a price as low as 97.5 cents.
Junk-rated borrowers are finding it more expensive to borrow in the loan market after prices of the debt are poised to drop for two consecutive months. New issue loan volume for the month through Sept. 28 is $15.1 billion, less than half of the $30.5 billion borrowed during the same period in 2010, according to Standard & Poor's Leveraged Commentary & Data.
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