Quality Issuers :Tough times even for triple As
However, in mid-1998, recalls corporate treasury manager Jerome Lienhard, the funding team started to notice a change in market sentiment.
"In May 1998 we did a [$1 billion] dollar Eurobond [jointly lead by Credit Suisse First Boston, JP Morgan and Merrill Lynch] and beforehand we had done a roadshow. Normally we would have seen big institutional buying as well as big Benelux retail buying spread tightening. But it just stalled out." At the time Japan had just been put on negative outlook and other Japan-linked issuers were paying significant premiums to previous deals. This was TMCC's first Eurodollar issue for around nine months. The issuer paid 23 basis points over then versus 32bp over this time.
Bookrunners admitted that there was a substantial flow of bonds back through the brokers from banks unable to place paper and syndicate members commented at the time that "despite the roadshows which effectively underlined TMCC's status as a US company, the response to the deal was lukewarm to say the least".
The bookrunners confirmed the problem to the issuer: investors were at best indifferent to names associated with Japan and at worst they were now avoiding them.