CIBC Rolls the Dice With New HY Hire
January 24, 2000
CIBC World Markets hired a high yield senior gaming analyst last week to try to cash in on the robust sector.
Jacques Cornet jumped ship from Gleacher & Co. to help launch CIBC's new high yield effort in the gaming sector. The company said that its first foray into the gaming arena is in response to the frothy gambling market over the past 18 months.
CIBC said it is currently the top lead arranger of bank loans in the gaming sector, and now it hopes to make better use of is customer base and those relationships for high yield debt as well.
As recently as last month, some analysts predicted that acquisitions in the gaming sector will take a more dominant role over the coming months.
That will be the result of a slowdown in the explosive growth that characterized the industry over the past couple of years, forcing issuers to look more closely at acquisitions instead of internal growth (HYR 12/13/99).
Gaming stocks ended 1999 on a high note for some in the industry - some were up 400% on the year - including some of the high yield issuers, according to industry sources.
So with companies flush with new valuable stock, and with original building projects coming to an end, gaming analysts said that issuers simply would look to buy new streams of revenue.
Furthermore, when an issuer is earning 30%, or even 20%, which is entirely possible in this sector and it can issue bonds and 10%, it's a good play for investors as well, said a portfolio manager.