Titan offering high-yield notes

Titan International Inc., the maker of tire and wheel systems for off-highway equipment, is offering notes as high-yield, high-risk issuers increase leverage through debt financing.

Titan plans to sell at least $150 million of senior unsecured debt to repurchase notes due in 2012 and for general corporate purposes, the Quincy-based company said in a statement distributed by Business Wire.

Almost two-thirds of companies selling high-yield bonds and seeking bank loans since September have used proceeds to increase leverage, Bank of America Corp. credit strategists Oleg Melentyev and Mike Cho wrote yesterday in a research note. Companies are taking advantage of borrowing costs near the lowest since 2007 to finance buyouts, pay dividends and fund capital expenditures, the analysts said.

"The mix of recent transactions in the leveraged finance space suggests that more issuers are becoming comfortable to add leverage to their balance sheets," Melentyev and Cho wrote. The 65 percent "releveraging" rate among new issues since September is still less than the 75 percent historical average, they said.

The extra yield investors demand to own high-yield bonds widened 10 basis points to 646 basis points yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. Spreads narrowed 14 basis points last week. Absolute yields rose to 8.79 percent after reaching 8.23 percent on April 26, the lowest since July 2007.

High-yield bonds are rated below Baa3 by Moody's Investors Service and BBB- by Standard & Poor's. A basis point is 0.01 percentage point.