NETHERLANDS - Valcon to buy back VNU debt

Press reports say the offer is for EUR 150m in extendable floating rate notes due September 28 2006, EUR 500m in 6.625% bonds due May 30 2007, DFL 600m (EUR 272m) in bonds due June 16 2008, EUR 600m in 6.75% notes due October 29 2008 and and $150m in 7.6% dollar notes due June 2009. It is understood that the consortium will not buy back the 5.625% £250m sterling resettable debenture loan, which can be put at par in May 2010. This has reportedly caused some of the holders of these bonds to hedge them by buying protection in the CDS market.

Press reports suggest that in the credit derivatives market, the cost of insuring VNU's debt rose about 5 basis points to 190 basis points, implying that it costs EUR 190,000 per year to insure EUR 10m of VNU's debt against default.

At the same time, Standard & Poor's has reportedly indicated that it is concerned about the financial profile of the company going forward. It has lowered its credit ratings for the company from BBB/A-3 to B+/B and these could be lowered further.

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