IGT sells $1 bil. of junk-rated notes

International Game of Reno said in March it would buy Sodak, its Rapid City, S.D.-based distributor for American Indian-owned casinos for $230 million of cash.

The company sold $600 million of 10-year notes at a yield of 8.53 percent, or 300 basis points more than 10-year Treasuries. A $400 million issue of five-year notes sold at 8.11 percent, or 275 basis points more than Treasuries.

The spread over Treasuries for the 10-year notes was at the wide end of the 275 to 300 basis point range set by the company before the sale. While investors said they like the company's prospects, junk bonds weakened in recent days in the face of more than $10 billion of new bonds.

The five-year notes sold at the middle of the range set by the company.

The notes are rated "Ba1" by Moody's Investors Service and "BB+" by Standard & Poor's Corp., both one notch below investment grade.

Moody's said its rating outlook was stable as the company has a "strong franchise and ability to maintain its market dominance." The rating company said International Game's "aggressive share repurchases and propensity to make strategic acquisitions" could reduce its financial strength.

Salomon Smith Barney arranged the private sale.

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