Fuse on the “debt time bomb” extended

Time bomb.jpgIn the August 30 Commentary, we put out a call for chemical companies to refinance their debt now at favorable rates: “Today there is no excuse for a company not to push oput its debt maturities. Interest rates are at record lows, and financing is available – even to those companies without the most stellar credit ratings.”

Right on cue, more and more companies are lining up to do just that. On September 13, US-based chemical major Huntsman announced it will offer $350m in 8.625% senior notes due 2021. Some of the proceeds will be used to retire $165m in 7.875% notes due 2014.

Days earlier on September 10, US-based plastics compounder PolyOne announced a $320m offering of 7.375% senior notes due 2020, proceeds of which will be used to retire its 8.875% senior notes due 2012.

And on September 7, US-based chemical major Celanese announced it will offer $400m in senior notes due 2018. Proceeds will be used to pay down debt on its senior credit facility.

There will be plenty more to come if financing markets remain stable, potentially making 2010 a blockbuster year for debt issuance. The fuse on the “debt time bomb” many were worrying about a year ago is getting extended, giving companies more time to address their leverage issues.


Photo credit: www.dailyme.com/gallery/organization/world-bank.html

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