US high-yield borrowers pressed to announce new deals
* Bankers tell issuers to go now as rates still cheap
* Up to US$40bn of M&A bond supply predicted by year-end
* Pushback on some deals seen credit specific
By Natalie Harrison
NEW YORK, Sept 12 (IFR) - "Now or never" is the message from debt capital market bankers to junk-rated corporates, which are being pressured to bring bond deals now - even as the US high-yield market grapples with some US$22bn in new issues since Labor Day.
Their appeal to corporate treasurers not to wait is based on growing belief that rate hikes and consequently higher borrowing costs are imminent as the US economy shows improvement.
"It will get a lot worse, and that's the message I am trying to get across to issuers, because no board is going to call you an idiot for getting 10-year money at less than 6%," said one DCM banker.
"If you're climbing a mountain, there's only one peak. You want to be as close to that peak as possible. Don't be 25bp smart."
Additional pressure is coming in the form of a repricing in the new issue yield curve, which has moved at least 25bp wider over the past week. Continued...