Lenders beware: you could be fighting things out with preferred shareholders in court if a creditor declares bankruptcy. The bankruptcy case of Park Cities Banks holding companies offers a clue of what lies ahead of investors with trust-preferred securities in struggling banksand its not an appealing option.
Las Vegas Sands is spending heavily on development projects and shareholder dividends, but lenders are still comfortable enough with the strength of its balance sheet to allow for some more financial flexibility.
Recent reports that Tradeweb was in talks with several banks to develop a trading platform for both investment grade and below investment grade corporate bonds has prompted a good deal of discussion about the potential for more widespread electronic trading. The general view is that it is both possible and overdue.
An increase in covenant-lite structures and payment-in-kind issuance have chipped away at investor protections, and continued historic lows in interest rates have led to spreads dangerously thin for default and inflation risks.
The dual trends of step-up coupons and the small pool of buyers both illustrate the extent of the influence of this small group of investors and increase the probability that they will continue to wield this power over the growing CLO market.
Companies that pull their bonds from the high yield bond market might describe their experience as one of disappointment. Eric DeMarco, President and CEO of Kratos Defense & Security Solutions, describes it as an act of discipline.
Like its larger, well-fed American cousin, the European high yield bond market has seen record issuance this year. Momentum is starting to slow, however, in the face of increased competition for investors dollars from the loan market.
When an acquisition veers off course, it also runs planned debt transactions off the road. Thats whats happening in the case of the $2.5 billion acquisition of Cooper Tire & Rubber by Indian tire company Apollo Tyres.
Its looking increasingly likely that Caesars Entertainment Corp. is planning a distressed debt exchange sometime in 2014 in an effort to avoid filing for bankruptcy if it runs out of cash the following year.
Just because macroeconomic concerns have abated doesnt mean investors should stop worrying about the health of the high yield bond and leveraged loan markets, according to Standard & Poors.
The inner circle of second-lien lenders is getting more crowded as it draws more equity funds, CLOs and credit opportunity funds into the arena.
Weve seen this movie before and didnt like how it ended. Leverage levels on buyout deals are trending upwards and in the direction of the levels they were during the frothy times of the buyout boom seven years ago.
The Small Business Administration is suspending fees on its smallest loans in an effort to spur more lending to startups and other companies banks see as risky.
When the next wave of defaults hits the high yield bond market, expect a longer cycle that will see investors lose more money than they did the last time around, according to Moodys.
Halloween could usher in several seasons of legal and financial pain if Energy Future Holdings files for bankruptcy to avoid a $270 million bond interest payment looming on All Souls Day (Nov. 1).