High-yield debt: Missing the wood and the trees

Investors in a Morgan Stanley-sponsored high-yield issue for start-up Mandra Forestry Finance (MFF) are restive. A $195 million issue of high-yield notes in May 2005 at par has slid to 85c on the dollar since issue last May. Behind the drop is the delay in the acquisition of plantation lands in China’s Anhui province that has set back the company’s business plan by some nine months, according to Standard and Poor’s credit analyst Mary Ellen Olson, prompting S&P in March to issue a negative outlook on its initial B rating.