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Retailer Could Spark High-Yield Rush

Royal Vendex, a Dutch non-food retailer, could provide the deal that re-opens the European high-yield floodgates after the August lull as soon as this week, with a €350 million deal lead-managed by Citigroup and ING Bank.

Royal Vendex, a Dutch non-food retailer, could provide the deal that re-opens the European high-yield floodgates after the August lull as soon as this week, with a €350 million deal lead-managed by Citigroup and ING Bank.

Market professionals said they have been expecting a deal to come once the $1.4 billion buy-out of Vendex by Kohlberg Kravis Roberts and AlpInvest Partners was completed. As of the end of July, the consortium owns 99.4% of Vendex share capital. The retailer was delisted from Euronext in Amsterdam on August 3 and all $200 million of the company's 7.375% notes due 2010 were redeemed the next day.

The rating on the new bonds is not yet finalized. However, Andrew Canwell, corporate finance analyst at Moody's Investors Service in London, pointed out that Vendex's B1 senior subordinated debt has been on negative watch since April in anticipation of changes to the company's capital structure following the buyout.

Martha van Dijk, spokeswoman for the private equity consortium of KKR and AlpInvest, declined comment, and Marius Zomer, spokesman for Vendex, did not return calls. Bankers at ING and Citigroup either declined comment or were on vacation and did not return calls.

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