It’s not the first time but it’s a far cry from the norm where an issuer attracts more than enough demand to allow a bond offering to be upsized.
On Thursday, IAMGOLD Corp. priced a US$400 million high yield offering of eight-year notes. When the roadshow started the goal was to raise US$500 million. The idea was for IAMGOLD to raise sufficient new capital to fund the redemption of its outstanding 6.75 per cent Senior Notes that were due in 2020. About US$489 million of bonds were set to be redeemed.
According to Harry Koza, Senior Market Analyst at IFR Markets Canada, IAMGOLD has joined a rather select group. Koza, who maintains an extensive database, said that since 2004, five issuers, the bulk of which were offering junk bonds or high yield securities, have received less cash than they intended.
The four high yield borrowers are: Telesat Canada (which in November 2016 received US$500 million vs. a planned US$750 million); Sunshine Oilsands (which in June 2014 ended up with US$200 million compared with an anticipated US$325 million); Canwest (which raised US$400 million vs. a planned US$650 million in June 2007) and Hudson Bay Mining and Smelting (whose 2004 ambitions to raise US$200 million ended up at US$175 million.) Among investment grade borrowers, Peel region stands alone: in 2010, it sought $390 million and closed on $300 million.)
It’s worth noting that on the same day that IAMGOLD cut the size of its offering, another high yield issuer Valeant Inc. had a different outcome: instead of raising US$2.5 billion the company ended up with US$3.25 billion.