High-yield deals pulled, postponed as risk appetite wanes

Fri Nov 16, 2012 1:02pm EST
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By Joy Ferguson and Stephen Carter

NEW YORK, Nov 16 (IFR) - Like a diner pushing back from the table after a Thanksgiving feast, high-yield investors are now pulling back from the high-yield primary market after feasting on a non-stop diet of new issues since September.

The appetite for risk has evaporated and with it the demand for new issues, said one syndicate official.

Meanwhile, with the presidential election over, attention has refocused on the fiscal cliff, weak economic data in the US, geo-political tensions in the Middle East, and the sovereign credit crisis and economic downturn in Europe, which is now officially in a recession.

That was a problem for the large amount of deals that were stacked up to price on Thursday and Friday, and the bad conditions led some of the more opportunistic issuers to pull out of the market or revise their deals.

There were no new issue announcements on Thursday, two deals were postponed, some were restructured, and some priced wide of price talk.

Canadian aerospace giant Bombardier postponed its US$1bn two-part offering, citing market conditions. Proceeds from the eight-year and 10-year bullet notes were to be used for general corporate purposes. Deutsche Bank, BofA Merrill, BNP Paribas, Citigroup, Credit Agricole, JP Morgan, NBF and RBC had been leading the deal.

Eagle Midco, holding company for Epicor Software, scrapped plans to price its US$340m five-year non-call one senior discount notes through BofA Merrill and RBC. The deal had been one of the more aggressive issues of the week, in terms of structure and use of proceeds, which were expected to fund a distribution to equity holders.

Other issuers had to revise their offerings to get them through. Bubble wrap-maker Sealed Air, for instance, cut its US$850m offering in half, dropping the 10-year tranche and going with a US$425m eight-year bullet issue that priced at 6.5% at par, outside and wide of its 6.25% price talk.   Continued...