Challenged Issuers Look to Borrow Before Bond Window ShuttersBy
At least three challenged issuers are gauging investor interest to sell debt in what may be an attempt to take advantage of credit markets entering the later stages of the cycle.
TransCanada Pipelines Ltd., truck builder Oshkosh Corp. and consumer credit reporting agency Equifax Inc. all hired banks and scheduled meetings with investors, moves that are typical before a bond offering. None of them face imminent maturities or are trying to finance any takeover, but all three carry baggage that may make them less attractive to bond investors if markets back up.
TransCanada was downgraded by S&P to BBB+ from A- yesterday while Oshkosh is a crossover credit, meaning it is split-rated between investment grade and junk. Equifax meanwhile has been reeling from a massive data breach.
“It’s better early than late because you know the market is fine now,” according to Zachary Chavis, a portfolio manager at Sage Advisory Services.
Chavis said that selling high-grade debt now shouldn’t be too challenging as long as issuers are offering 10-15 basis points in new issue concession.
The markets were especially quiet Wednesday. The Public Service Electric & Gas $700 million offering was the lone transaction to price as investors focused on the FOMC meeting. So while the three firms have yet to announce a deal, which usually comes within a day or two of the investor presentations, they could very well announce on Thursday.
— With assistance by Allan Lopez, and Adam Tempkin