WireCo WorldGroup Inc., the maker of wire rope and cable structures, is marketing debt as a measure of difficulty for corporate borrowing fell to the lowest level in five years.
WireCo WorldGroup plans to sell $275 million of senior notes, the company said in a statement distributed by PR Newswire yesterday. Proceeds will be used to repay debt maturing in 2015 and for general corporate purposes, the company said.
Moody’s Investors Service’s Liquidity-Stress Index fell to 4.8 percent in April, the lowest since 2005 and down from a record 20.9 percent in March 2009, the company said in a report. The index falls as the availability of cash in the corporate bond market improves.
“Companies have a sizable amount of maturing debt in the next three to five years,” Moody’s analyst John Puchalla said yesterday in a telephone interview. “The better liquidity is, the easier time that companies will have refinancing those maturities.”
Moody’s assigns speculative-grade liquidity ratings on a scale of 1 to 4. Companies rated 4 are the least likely to meet their obligations over the coming 12 months without external financing. The Liquidity-Stress Index is the percentage of companies with a 4 ranking.
Speculative-grade companies have more than $700 billion of debt maturing from 2012 to 2014, Moody’s said in a Feb. 1 report.
Moody’s raised its speculative-grade liquidity ratings on 25 companies in April, the most in a single month, and downgraded two, the company said in the new report. The ratio of upgrades to downgrades was also a record high, Moody’s said.
WireCo WorldGroup’s proposed $275 million of notes were ranked B3 by Moody’s, and Standard & Poor’s rated them a B, one step higher. The notes are due in 2017, the rating companies said; the Kansas City, Missouri-based company’s statement did not specify the maturity.
The extra yield investors demand to own high-yield, high- risk bonds rose 11 basis points yesterday to 568 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II Index. High-yield bonds are rated below Baa3 by Moody’s and BBB-by Standard & Poor’s.
Investment-grade spreads widened 3 basis points to 160 basis points, according to the Bank of American Merrill Lynch U.S. Corporate Master Index. They have expanded 9 basis points since touching 151 basis points on April 21, the narrowest since October 2007.
By: Craig Trudell from Business Week