Shire raises eyebrows with stunning debut
By Hillary Flynn
NEW YORK, Sept 23 (IFR) - Investors piled into the debut bond from Shire this week, ignoring some clear warning signals that the drugmaker's deal might have offered a little bit less than meets the eye.
For months, the buyside has seemed to have more cash than it knows what to do with, a scenario that has propelled the US high-grade primary to issuance record after issuance record.
But Shire's deal raised eyebrows even in a market that takes every trade's success for granted, easily crossing the line despite the company's debt plans appearing rather optimistic.
The US$12.1bn trade amassed a US$28.5bn order book, even as analysts were noting that Shire's debt-to-Ebitda ratio had jumped from less than one time to more than seven times in 12 months.
Analysts at GimmeCredit were fairly blunt in their appraisal.
"We do not believe the new issue offered sufficient spread to reward investors for taking these risks," they said. "It's a total shot in the dark."
FEELING A BIT TIGHT
Proceeds will help finance Shire's US$32bn hostile takeover of rival Baxalta, and some of the buyside demand could be put down to investor appetite for all things pharma. Continuación...