SABMiller Plc, the world's No. 2 brewer, said on Monday it planned to issue about $2 billion worth of debt, mostly to refinance existing borrowings at its recently acquired U.S. brewing unit, under the Reuters statement. SABMiller, the maker of Miller Lite, Pilsner Urquell and Castle beers, said about $1.7 billion would be issued by its U.S. unit, Miller Brewing Co., which would use proceeds to refinance a large chunk of the existing bank debt.

SABMiller also expects to directly raise $300 million for general corporate purposes. SABMiller said in May it would take three years to turn around Miller, which it bought for $5.6 billion last July. Miller has been losing sales and market share for years in a battle with the world's biggest brewer, Anheuser-Busch Cos. Inc., which makes Budweiser and controls half the U.S. beer market. But as a new name in the corporate bond market, Miller will enjoy an advantage as investors seek new securities.

"The trouble is that some investors are so full of big issuers like Ford and (General Motors Acceptance Corp.), that people are dying for something they don't own," said Didi Weinblatt, vice president at USAA Investment Management Co.

Activity in the secondary market Monday was subdued, with spreads, the gap between corporate yields and Treasury yields, ending the day roughly unchanged. Auto paper started out the day a couple of basis points wider, but came back to a couple of basis points tighter by the end of the day.

A basis point is one-hundredth of a percentage point. In the high-yield market, activity picked up Monday with nearly $3 billion expected to price this week, according to Reuters data. That is outpacing the high-grade market, which has around $2.5 billion in the pipeline for the week.

05 August, 2003