Freshly Minted – July 1, 1999

HIGH YIELD

It has been a relatively slow week in the high yield market with the Fed announcement of a 25bp tightening and a holiday weekend. Lazard reported that the past week saw $238 million of inflows into high yield funds after six weeks of outflows. 10 new deals priced.

Shipping activity has been limited. Hvide bonds traded up toward the end of the week (from as low as 41 to as high as 53 with trades done at 46) though there was no “real” news on the company. Elsewhere, rig and supply boat bonds popped up a bit as crude broke $19 and optimism that drillers will get busier and day rates and utilization will pick in kind.

HVIDE

We understand that DLJ’s attempt to underwrite a $300 million PIK high yield bond to take out Hvide’s bank debt has been modified. Under the modification, the deal will be offered in two $150 million tranches. One of the tranches will be a cash pay with a coupon of 13%, while the second will be a PIK structure with a coupon of 16%. Hvide’s bonds traded up sharply this week. The modification of the deal may improve the chances of getting it done as it will provide a higher IRR for the buyers of the PIK.

Hvide executives are presently on the roadshow and we expect a final result will be clearer by mid July.

This is only an excerpt of Freshly Minted – July 1, 1999

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