Huntington Ingalls sets talk for $1.18 billion two-part note offering

By Paul A. Harris

Portland, Ore., March 3 - Huntington Ingalls Industries, Inc. set price talk for its $1.175 billion two-part offering of senior notes (Ba3/B+/BB) on Thursday, according to an informed source.

A tranche of 10-year notes is talked with a 7% to 7¼% yield.

Meanwhile a tranche of seven-year notes is talked to price 25 basis points inside of the 10-year notes.

The tranche amounts are expected to be set in approximately equal sizes.

The books close at 11 a.m. ET on Friday, and the deal is set to price thereafter.

Credit Suisse Securities, J.P. Morgan Securities LLC, RBS Securities Inc. and Wells Fargo Securities are the joint bookrunners for the Rule 144A with registration rights offering.

The 10-year notes come with five years of call protection, and the seven-year notes come with four years of call protection.

The notes in both tranches feature three-year 35% equity clawbacks and 101% poison puts.

Proceeds will be used to capitalize the company, as well as to fund a cash transfer to Northrop Grumman, which is spinning off Huntington Ingalls, Northrop's shipbuilding business.

Proceeds will also be used for general corporate purposes.

The proceeds will be funded into escrow prior to the effective date of the spinoff.

Huntington Ingalls Industries will be based in Newport News, Va.

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