The high-yield bonds of Heckler & Koch, a German handgun and small-arms manufacturer, rose last week after the company announced a five-year, $26 million contract for handguns with the U.S. Department of Homeland Security. The 9.25% bonds due in '11, already trading at a premium, lifted a point to 106-7.
The news came ahead of a quarterly earnings announcement that was set to be revealed as BW went to press last week, and just a month after its inaugural ¤120 million Citigroup-led high-yield offering.
"Heckler & Koch is trying to expand its business in the U.S. and this contract is a further step in that direction," said Peter Dalena, high-yield research analyst at Citigroup. "We understand this to be a somewhat seasonally lumpy business, so what the company says about its outlook for the seasonally important fourth quarter on the call this Friday is especially relevant to how the bond will trade in the near-term," he added.
