{"id":12704,"date":"2015-09-28T05:40:09","date_gmt":"2015-09-28T10:40:09","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12704"},"modified":"2015-09-28T05:40:09","modified_gmt":"2015-09-28T10:40:09","slug":"this-is-when-bonds-go-kaboom","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12704","title":{"rendered":"This is When Bonds Go Kaboom!"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/09\/27\/junk-bonds-distresses-debt-ratio-spiking-spreads\/\" target=\"_blank\">This is When Bonds Go Kaboom!<\/a><\/h3>\n<p><strong>The toxic miasma of \u201cdistressed debt.\u201d<\/strong><\/p>\n<p>It\u2019s getting tougher out there for our QE and ZIRP-coddled corporate junk-bond heroes.<\/p>\n<p>Unisys, whose revenues and profits decline year after year and whose stock dropped from over $400 a share during the prior tech bubble to $13 a share now, withdrew its offer to sell $350 million of bonds on Friday.<\/p>\n<p>The \u201ccurrent terms and conditions available in the market were not attractive for the company to move forward,\u201d it said. According to\u00a0<a href=\"http:\/\/www.highyieldbond.com\/\" target=\"_blank\"><u>S&amp;P Capital IQ\u2019s LCD,<\/u><\/a>\u00a0the five-year senior secured notes due in 2020, rated BB\/Ba2, had been guided at around 8%. But buyers were leery, and they demanded more yield. They wanted to be rewarded just a little more for the substantial risk they were taking. So the notes failed to price, and Unisys withdrew the offering.<\/p>\n<p>Unisys isn\u2019t an oil company, or a mining company, or a coal company \u2013 sectors that have been eviscerated by the commodities rout and are having trouble issuing any debt at all. Unisys is a tech company.<\/p>\n<p>But Unisys wasn\u2019t the only one:\u00a0It was the 15th bond offering withdrawn so far this year, according to LCD, though two of them \u2013 Fortescue Metals and Presidio \u2013 were able to pull them off later. In total, nearly $4 billion in bond offerings were withdrawn this year.<\/p>\n<p>Olin Corp., which manufactures chlor-alkali products, wasn\u2019t that lucky. It\u00a0<em>had to have<\/em>the money to fund its acquisition of the chlorine products business of Dow Chemical. Its $1.5 billion offering came in two tranches: eight-year notes and 10-year notes, guided around 6.5% and 6.75% respectively. But investors sniffed at them and lost their appetite. LCD reported on Thursday that they were pushing for yields \u201cin the mid-to-high 7% range.\u201d<\/p>\n<p>But that wasn\u2019t enough either. On Friday, Olin ended up selling\u00a0<a href=\"http:\/\/www.leveragedfinancenews.com\/news\/price-talk-widens-for-olins-hy-bonds-258236-1.html\" target=\"_blank\"><u>$1.22 billion of bonds<\/u><\/a>, with the eight-year notes priced to yield 9.75% and the 10-year notes 10%.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is When Bonds Go Kaboom! The toxic miasma of \u201cdistressed debt.\u201d It\u2019s getting tougher out there for our QE and ZIRP-coddled corporate junk-bond heroes. Unisys, whose revenues and profits decline year after year and whose stock dropped from over $400 a share during the prior tech bubble to $13 a share now, withdrew its [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[88,3954,195,9327,1154,661,662,4254,4255,1939],"class_list":["post-12704","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bonds","tag-corporate-bonds","tag-debt","tag-distressed-debt","tag-interest-rate-policy","tag-qe","tag-quantitative-easing","tag-wolf-richter","tag-wolfstreet","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12704"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12704\/revisions"}],"predecessor-version":[{"id":12705,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12704\/revisions\/12705"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}