Bermuda-based Validus Holdings Ltd. yesterday priced $250 million of debt in the reinsurer’s debut bond sale.

The coupon on the 30-year unsecured senior notes is 8.875 percent, the company announced last night, and the offering is expected to close on or about January 26.

Proceeds may be used for general corporate purposes, including stock repurchases, dividends and acquisitions, the company said in a filing with the US Securities and Exchange Commission.

Rating agency Standard & Poor’s yesterday assigned a BBB- rating to the pending notes, while Moody’s assigned them a Baa2 rating. Issuers may be taking advantage of low borrowing costs to raise money for acquisitions as a means of improving earnings, said Jeffrey Kleintop, chief market strategist at LPL Financial in Boston.

“Money is relatively cheap for high-grade issuers, it’s the cheapest it’s been in a while, and looking out at their prospects for earnings growth, some of these companies are feeling under the gun with how they are going to boost earnings numbers,” said Kleintop, who helps oversee about $278 billion. “One of the ways they’re looking to do that is thinking ‘hey, let’s go buy some earnings growth’.”

The yield on investment-grade bonds was 4.56 percent, compared with last year’s peak of 8.42 percent on March 10, according to Bank of America Merrill Lynch’s US Corporate Master index.

Validus bought fellow Bermuda reinsurer IPC Holdings Ltd. last year in a cash-and-stock transaction valued at $1.73 billion, according to data compiled by Bloomberg. It was the company’s first acquisition since its initial public offering in July 2007. It was expected to sell the bonds yesterday, according to a person familiar with the offering, who declined to be identified because terms aren’t set. Jonathan Doorley, a Validus spokesman, declined to comment on the offering beyond confirming that it is the company’s first. Validus was one of the ‘Class of 2005’ reinsurers, established in Bermuda to meet the need for extra capacity after Hurricane Katrina. Kevin Lee, a senior credit analyst at Moody’s, said: “This new debt issuance will tap into the additional borrowing capacity that Validus gained through its recent acquisition of IPC Holdings Ltd.”

In its ratings commentary, S&P stated: “Given that the company just completed its amalgamation with IPC Holdings in September 2009, we do not expect that it will use pending debt proceeds to finance another acquisition in the short term.”

The New York-based rating agnecy added that the ratings were based Validus’s expanding competitive position, strong capitalisation, strong risk controls around exposure management, underwriting, and modelling; and very strong operating performance since inception. Partially offsetting these strengths are the potential integration risk related to the IPC transaction, the possibility of significant earnings volatility because of its catastrophe exposure.

“We expect that Validus’s operating performance will remain strong in years when catastrophe activity is normal,” Standard & Poor’s credit analyst Tracy Dolin said. “Results will be volatile because of the company’s property catastrophe focus, which will increase as a result of the IPC acquisition, but the diversification from the Talbot book of business partially mitigates this volatility.”