Wyndham Issues Senior Notes - Analyst Blog

Wyndham Worldwide Corporation (WYN) announced the pricing of $250 million unsecured senior notes. The senior notes bear an annual interest rate of 5.75% and will mature in eight years.  The interest will be paid semi annually on February 1 and August 1 of each year, commencing February 1, 2011. The senior note offering is expected to close by September 20, 2010.
 
The company plans to use the sale proceeds from the offering to finance outstanding debt and other corporate general purposes.  The notes were offered to the public at a price of 99.949% of principal amount.
 
Management considers the current financial environment suitable for note offering as the historically low interest rate level is prevailing in the market.
 
Wyndham has made the offer through Banc of America Securities LLC, a part of Bank of America Corporation (BAC), Deutsche Bank Securities Inc., a part of Deutsche Bank AG (DB), J.P. Morgan Securities LLC, a part of JPMorgan Chase & Co. (JPM) and RBS Securities Inc., a part of Royal Bank of Scotland Group plc (RBS).
 
As of June 30, 2010, long-term debt of the company was $1,763 million, down from $1,840 million as of December 31, 2009. The outstanding debt includes 6% senior unsecured notes due 2013, 9.875% senior notes due 2014, 3.50% convertible notes due 2012, 7.375% senior unsecured notes due 2020 and long-term securitized vacation ownership debt.
 
Apart from paying down the company's high-cost debt, the new offering will increase available fund and extend the maturity period of debt. Additionally, this issuance of note is a follow-up on management's target to attain optimal capital structure.
 
Last month, one of the company's peers, Choice Hotels International Inc. (CHH) also resorted to a similar measure in order to lower its debt burden by offering $250 million senior notes. This bond had an interest rate of 5.7% and a maturity period of 10 years.

Wyndham Worldwide Corporation currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.
 
BANK OF AMER CP (BAC): Free Stock Analysis Report
 
CHOICE HTL INTL (CHH): Free Stock Analysis Report
 
DEUTSCHE BK AG (DB): Free Stock Analysis Report
 
JPMORGAN CHASE (JPM): Free Stock Analysis Report
 
ROYAL BK SC-ADR (RBS): Free Stock Analysis Report
 
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
 
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