Private Market Notes...Monday, July 20

July 20, 2009

Private Market Notes: Monday, July 20, 2009

JPMorgan’s deals for Southern Montana Electric and Herdez are still in the market, sources confirmed. Southern Montana, an electric cooperative, is looking for $150 million in funds, while Herdez, a Mexico-based food company, is seeking $50 million. Both deals have been in the market since mid- to late-June.

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It looks like CIT Group has been thrown a lifeline from its bondholders in the form of a $3 billion, 2.5 year loan. Whether or not CIT manages to survive in the long-term, in the immediate term its rescue bodes well for the private placement market…

Last week I was speaking with a private placement agent who deals largely with foreign issuers. He said his potential clients had all been asking frantically about the plight of CIT, convinced that if CIT failed it would send the U.S. economy into another tailspin and send bond spreads through the roof. No one wants to be in the position of having a deal in the market during some cataclysmic market event (see Lehman Brothers last September and the resulting effects), so naturally those issuers have been more than a little hesitant to do deals. Now that CIT has at least some short term stability, perhaps those issuers have gained some confidence and will be more willing to enter the market. Only time will tell over the next couple of weeks.

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