“Junk” – The Public Debt Award

It was another interesting year in the public debt market. The bond market continued to be active with transactions that ran the gamut from the simplicity of straight issuance to the complexity of project financing. In the latter category, US Shipping (“USS”), for example, accessed the bond market to assist in the capitalization of its joint venture with The Blackstone Group and Lehman Brothers, which will warehouse USS’s fleet renewal program. Also of interest, was the final resolution of the Navigator Gas saga with the bondholders finally getting control of the company and its vessels.

Of the various transactions that occurred this year, two transactions and a trend stood out. High yield bonds returned in the US, a niche player successfully issued in Europe, and a new capital of high yield evolved. With the assistance of Merrill Lynch and JP Morgan, Angeliki Frangou’s Navios Maritime issued high yield bonds for the first time since the junk bond debacle of the late 1990s. Navios does not fear leverage and manages it well. So it was no surprise that in December, the company announced the successful sale of its $300 million of 9.5% Senior Notes due 2014, the proceeds of which were used to refinance its existing credit facility with HSH Nordbank. Priced at 99.316% to yield 9.625%, the Notes were offered in the United States only to qualified institutional buyers pursuant to Rule 144A. The Notes will initially be guaranteed by all of Navios’ existing subsidiaries, other than its South American business.

This is only an excerpt of “Junk” – The Public Debt Award

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.