Fortescue’s unwillingness to pay up to access the US leveraged loan and high-yield bond market has put its opportunistic attempt to refinance its loans and bonds on hold for now, but the company is expected to wait for more favourable terms to tap the US market again, bankers said.
Refinancing rates in the US leveraged loan market are at their lowest point in six years as higher spreads and yields are deterring opportunistic borrowers from trying to cut borrowing costs. At US$20bn in the year to date, refinancing volume is a whopping 90% lower than in the first quarter of 2014.
When Indonesian conglomerate CT Corp started talks with lenders for a US$1.275bn loan in November 2013, it faced an uphill struggle. The country was beset by raft of macroeconomic problems, including weak growth, an outflow of foreign capital and a deteriorating currency.