Outlook 2012: Cargill, AIG, CIT, LyondellBasell big deals in 2011; lower volume eyed in 2012

By Lisa Kerner

Charlotte, N.C., Dec. 30 - The volume of tender offers in 2011 may have been lower, but the year closed out with some big deals on record, a market source said.

In April, private company Cargill, Inc. bought back $2 billion of its debt in a standard tender refinancing that many higher-quality issuers complete and that allows bondholders to amortize any hit they may take, the source said.

American International Group, Inc. offered to exchange up to $2.5 billion of its hybrid securities in November for senior debt in a cross-border transaction that was motivated by the regulatory backdrop.

The source also noted the CIT Group Inc. and LyondellBasell Industries NV deals.

In June, CIT exchanged $8.77 billion of outstanding second-priority secured notes for notes maturing in the same year.

In October, LyondellBasell subsidiary Lyondell Chemical Co. tendered for up to $1.5 billion of its 8% senior secured dollar notes due 2017 and 8% senior secured euro notes due 2017 and up to $1.2 billion of its 11% senior secured dollar notes due 2018.

According to the source, 2011's lower tender offer volume was somewhat expected given that 2009 and 2010 were record-setting years in the liability management space. If anything, 2011 was a more normalized year compared to the past two years, the source said.

Looking ahead, it is hard to determine what 2012 will bring. The source said that despite current headwinds, underlying factors such as strategic transactions and debt maturities may cause a spike in liability management deals.

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