Deal of the Year – 2002Public Debt

“It is the rare item that inspires a bargain hunter to pay a premium. That’s why when CP Ships, whose very identity is defined by buying out-of-favor companies on the cheap, marched up to the Wall Street counter and ordered $200m worth of bonds yielding 10.75%, the ship finance industry was momentarily in shock.”Marine Money, June 2002

Like all capital markets, the public debt market opens and closes as unpredictably and as inexplicably as the shipping markets rise and fall. As one bond underwriter in New York said, “the high yield bond market is only about twice a year, so companies need to be ready and execution needs to be perfect.”

Although slipping gracefully through an open window, as JP Morgan did for Stena and Morgan Stanley did for Seacor, is a pretty thought, the reality is that the capital needs of companies generally don’t coincide with the few and fleeting moments that the bond window is open. This scenario sometimes leaves issuers with an unfortunate task – jumping through a closed window, and hoping they don’t get too bloodied along the way. That’s exactly what happened in the case of thisyear’s award winner.

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