Sticker-shock derails opportunistic US loan deals, for now
By Lynn Adler and Leela Parker
June 28 (Reuters) - Market turbulence has prompted U.S. companies to shelve more than $14 billion in loans meant to slice borrowing costs or fund shareholder dividends, confining most issuance to borrowers with imminent financing needs.
At least 15 of these opportunistic deals have been pulled since late-May, with more withdrawals likely, while issuers that have opted to forge ahead with their deals have been forced to sweeten terms to lure investors.
Many companies are looking for some pricing stability, even at higher rates, before again pursuing opportunistic refinancing and dividend funding issues.
"If we stabilize here, a few months from now that might be normal and issuers might not be as apprehensive to jump into the market at these wider levels if it still makes economic sense," said Peter Toal, managing director and head of global leveraged financing syndicate at Barclays.
"The market doesn't have to go all the way back to where it was, and a lot of them can come back," he said.
The Fed's looming tapering propelled 10-year Treasury yields up to nearly 2.70 percent from around 2 percent in a six-week period. The rate has since slipped back to about 2.50 percent.
Asurion, which provides customer services for the mobile phone industry, was one of the few borrowers to retest the choppy waters after pulling a refinancing effort early in June.
The company sliced that proposed $850 million refinancing a few weeks later, returning with a smaller $450 million issue and a much bigger discount of 96.5 versus 99-99.5 guidance. Continued...