Miller Homes Ends Europe’s Longest Garbage Drought Drought in 2009

British home builder Miller Homes raised £ 815 million as a result of bond sales on Friday, the leader said, but banks had to offer investors higher-than-expected returns to recover the junk debt market after its longest 13-year hiatus.

Due to the sharp turn of the European Central Bank and the invasion of Ukraine, which increased the cost of loans, companies remained outside the market of new unwanted issues for more than 10 weeks, with the longest market halt since 2009, when the global financial crisis raged, according to the analytical company Leverage Commentary and Data.

Miller raised £ 425 million from a seven-year bond with a yield of 8.25%, according to a Reuters forecast, from the initial average range of 7% proposed on Tuesday.

According to the record, the bond, paying a coupon of 7%, traded at a sharp discount of 93.45 cents.

The six-year floating rate raised 465 million euros. By paying a coupon 525 basis points above Euribor, the bond was valued at 97 cents, according to a note, below the original price of 98 cents.

The transaction is part of Apollo’s acquisition of Bridgepoint Group, announced in December.

According to LPC Refinitiv, investment banks remained in trading for about 25 billion euros when European markets for high-yield and credit loans closed in February. Miller’s case and its understated price underscore the problems that banks will face in selling them to investors.

In the 10 weeks since closing, the yield on unwanted euro bonds rose by more than 120 basis points to 5%, according to the BofA index, and 20 basis points of this increase came after the announcement of Miller’s deal on Monday.

“The (high-yield) market is still quite turbulent,” said George Curtis, portfolio manager at TwentyFour Asset Management.

“You still have inflation, you have rising rates, the central banks are forced to act. You have the potential to escalate from the point of view of Russia and Ukraine, especially around this gas situation,” he said. , given Moscow’s threat to cut gas supplies. Europe.


Diarmuid Tumi, head of strategic capital markets at Deutsche Bank, said high-yield deals were short-lived.

Instead, it is expected that most of the repurchase agreements concluded in the project will be financed in the credit market, which has already resumed in early April.

Lending loans were the best way to finance this year, surpassing unwanted debt, as their variable rate payments provide protection against rising interest rates. Demand for collateralised bonds also remains high.

Another way is through the private debt market, where underwriters are getting rid of part of the debt by supporting the takeover of the British supermarket Morrisons by the American private investment company Clayton, Dubilier & Rice, according to LPC Refinitiv.

Emissions are also subdued as companies have a weak appetite for debt refinancing after taking advantage of low borrowing costs during the COVID pandemic.

Some investment banks have lowered their forecasts for issuing high-yield securities this year. JPMorgan forecasts 90 billion euros against 140 billion euros.

In the first quarter, sales of high-yield bonds fell by 70% compared to the previous year in the euro market, as well as in a much more active US market. (Report by Yoruk Bahceli; edited by Sujata Rao and Paul Simao)

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