Borrowers: It's the roadshow, stupid!
Toys, baseball caps, anything to give investors that feelgood factor. It may seem like all cosmetics and packaging, but don't skimp on marketing your issue. Your access to funding could diminish next time round. Michelle Celarier reports.
US toy manufacturer Mattel gave out Barbie dolls to potential investors, Mexico's satellite TV company Innova offered baseball caps illustrating its global connections, and Australian mining company CRA showed off its prize pink diamond. Were such roadshow gimmicks the keys to the success of their bond deals? It's hard to say. But they are part of an increasingly hyped marketing environment designed to interest investors when there's stiff competition for their attention and their money.
Consider Innova's aggressively structured $375 million deal, a 10-year bond that is non-callable for five years. Innova has a relatively weak rating - B2 by Moody's Investors Service and B minus by Standard & Poor's - and hit the market on March 26, one of the worst bond market environments of the past year, when a number of other issues were being pulled. But it had one thing going for it. It excelled at marketing itself, showing investors a video illustrating its programming and its relationship with global media companies Newscorp and MCI Cable. Then there was the Sky Entertainment-emblazoned cap.
"It's impossible to separate any one of these features.