REFILE-BT, British Airways break freeze in US bond issuance
By Rachelle Kakouris
NEW YORK, June 25 (IFR) - British Airways and BT broke the silence in the US bond markets on Tuesday, testing investor appetite for risk after a global sell-off paralyzed new issuance for four straight trading days.
Domestic high-yield issuer TransDigm also stepped forward with a new deal, as borrowers defied talk that the new issue freeze would hold until after the July 4 holiday due to market jitters.
UK telecoms giant BT announced a USD600m SEC-registered three-year senior unsecured fixed note via RBS, BNP Paribas, Citi, Deutsche and HSBC.
Meanwhile national flag-carrier British Airways came out with a USD928.61m two-tranche deal that is being financed through an enhanced equipment trust certificate.
Citi, HSBC, Deutsche and Morgan Stanley are the joint active bookrunners on the trade.
Analysts said it might be a useful time for investors to buy despite the ongoing volatility concerns that have seen US Treasury yields spike in the past few weeks.
"This is a buying opportunity," said Zane Brown, a partner and fixed income strategist at US investment management firm Lord Abbett.
"This is an opportunity to add to add names that we've already well researched and weren't able to get attractive prices a month ago."
In the high-yield space, TransDigm announced a USD500m offering of eight-year non-call three senior subordinated debt that will fund a special dividend for holders of stock in the Cleveland-based aerospace components manufacturer.
Such shareholder-friendly deals are typically made under more bullish conditions, and the transaction is seen as a test of risk tolerance at a time when investors have been demanding better returns at a time of heightened volatility.
Moody's placed TransDigm's B1 corporate family rating on review for possible downgrade after the company said it was considering paying a USD1.0bn to USD1.8bn special dividend.