Double sign of revival in debt market
AXA seeks to refinance $2.8bn in loans, while travel group paves the way for flotation
The prospect of a huge corporate bond issue and a $500m (£310m) loan renegotiation, involving the private equity giant Blackstone, shows that the debt market may finally be exiting the doldrums.
Since the onset of the financial crisis, debt-laden, expanding, and even financially strong firms have struggled to renew, replace, or get hold of new loans on terms that don't hurt their businesses. But tens of billions of dollars of corporate bonds have now been issued in 2013, such as FTSE 100 insurance giant Prudential tapping the market for $700m.
Rival AXA is set to follow suit and is holding an investor call tomorrow. That will act as a prelude to asking the bond market for money to refinance an estimated $2.8bn of loans that are due to mature in January 2014.
A market source said: "Since the start of the year companies issuing bonds and investors have come out of the blocks like Usain Bolt. It's like they've decided they've finally got to put their money to work."
A more relaxed debt market is particularly good news for private equity, which typically bought companies on extraordinarily generous loan terms before lenders decided they could no longer risk their money when the credit crunch struck in 2007.
Travelport, which helps the travel industry process transactions such as buying airline tickets online, is 39 per cent owned by Blackstone and has $500m of loans due next year. However, chief executive Gordon Wilson has asked bankers at UBS and Credit Suisse to lead negotiations with the group's lenders to refinance those loans by March.
Should the terms be relaxed and the debt not have to be repaid for another few years, Travelport would have sufficient financial headroom to complete its long-mooted London Stock Exchange listing and gate-crash the FTSE 100.
Mr Wilson said: "There's a hot debt market at the moment, it seems good as some of the concerns about the US fiscal cliff seem to have abated and I think that the market is pleased with our performance at the moment."
Travelport was also hit in early 2012 when it lost a major customer, United Airlines, after decades of using one of the group's reservations systems. However, Travelport's revenue actually grew last year if that contract loss is excluded.
Voyage Care, which provides residential care and supported living, launches a £210m bond at the five-star Berkeley hotel in London tomorrow.
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