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AES bucks trend through timing

Issuer: AES CorporationAmount: $850 millionDate: September 8 2000Bookrunner: Morgan Stanley Dean Witter

Last year was the worst for high-yield markets since the crisis of the early 1990s. Default rates increased, issuance slowed down considerably, trading spreads widened out, and mutual funds saw a near continuous outflow of funds. Many issuers had to resort to more expensive forms of debt, whether short-term commercial paper or mezzanine loans, or had to risk the debt markets and pay higher premiums. So any deal that got done last year could be considered a success.

But AES Corporation wins largely on the basis of timing. Windows of opportunity were rare, and Morgan Stanley Dean Witter gauged the mood of the market well. "The tough part of any issue last year was that between marketing and launching - the prices could change so much," says Bill Kourakas, co-head of leveraged finance at MSDW. "We picked a time when that would be minimized, which was the period right after Labor Day [September 5]. We had noticed a pick-up in sentiment in the weeks before Labor Day, and anticipated that demand would build up right afterwards."

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