March/April Recap: Private Mkt. Issuance Simmers to $2.19 Billion
More but smaller deals as issuance tapers-off through April...
May 6, 2009
The U.S. private placement market priced $2.19 billion between March and April, spread over 14 deals, according to data compiled by Private Placement Letter. That figure represents a pull-back in volume from the $2.82 billion that priced during the first two months of the year, but an increase in the overall number of deals from 10 to 14.
Overall, issuance was steady throughout March, with about $1.305 billion and nine deals pricing during the month. However, as April began, Spring Break season and the Easter and Passover holidays threw enough of a disruption into the market to make issuance taper-off significantly, and the month saw a total of only $885 million over five deals.
The mix of domestic and foreign deals maintained a healthy ratio, and while half of the 14 deals during the period came from the Energy & Utilities sector, a growing variety of other industries were represented.
Foreign Deals
Between March and April, the total of 14 private placements was split evenly between deals from the U.S. and abroad, however, in terms of volume, foreign countries actually edged out the U.S. throughout the period, sending $1.350 billion to the market. Australia, Canada, and The Netherlands all sent two deals apiece to the U.S. market, with the U.K. adding a deal.
The Netherlands took the lead in terms of volume with $543 million spread between Barclays Capital’s $393 million, multi-currency deal for Eneco Holding NV, and RBS Greenwich Capital’s $150 million deal for Nutreco Holding NV. The lone deal out of the U.K. was a $320 million offering from Bunzl plc, via Banc of America Securities Merrill Lynch and RBS.
Australia’s two deals accounted for $285 million, with a $175 million offering from Caltex Australia, led by BASML, and a $110 million deal from Brambles Ltd., led by Barclays and RBS. Canada also added $202.5 million to the market with a $125 million deal for ARC Resources Ltd., led by Citigroup, and a $77.5 million dual currency deal for Keyera Energy, led by RBC Capital Markets.
Industries
The Energy & Utilities sector dominated the landscape in March and April, as it has since last fall, as investors continued to favor more defensive plays. However, there was a good mix of other industries such food-related and business services deals.
The past two months saw seven deals and a total of $1.26 billion in energy-related deals, the largest of which was the $393 million Eneco deal. BASML brought a $300 million deal to market for Tri-State Generation and Transmission Association Inc., as well as the $175 million Caltex deal. JPMorgan Securities priced a $140 million deal for the Iroquois Gas Transmission System, and Citi’s ARC Resources weighed in at $125 million. RBC’s Keyera deal was next in size at $77.5 million, and rounding out the energy sector offerings was Key Banc Capital Market’s $50 million deal for CH Energy Group Inc.
The Business Services sector included $430 million, with deals from Bunzl and Brambles, while the Food sector included the Nutreco deal and a $100 million offering from Ralcorp, led by SPP Capital Partners, to total $250 million in the market.
JPMorgan’s $100 million deal for repeat issuer Woodward Governor Co. was the lone deal from the Industrial & Manufacturing sector, while Wells Fargo’s deals for Discount Tire and Wheels Inc., at $100 million and $50 million, respectively, represented the Retail and Transportation sectors.
Year-Over-Year
Through February, the private placement market posted better year-over-year volume numbers than in 2008—$2.82 billion versus $1.65 billion for the year-prior period—but the past two month’s results caused this year’s total to fall behind that of last year.
Since the New Year, the private placement market has priced a total of $4.983 billion, versus a total of $6.144 billion for the first four months of 2008, a difference of nearly 20%. However, with the typically-active month of May just beginning, and with several new deals already being road-showed, hopes are still high that volume will meet or even exceed last year’s numbers.—GC
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