Hope, fear and wonder as a new market opens
The good, the bad and the illiquid
Schneider plugs into a wider market
Ford: seeking benchmark status
Lafarge: the need for good timing
For bondholders, utility companies are a little like gold. They offer a stable flow of cash, something which is often difficult to find in other sectors, and an attractive alternative for investors eager to diversify their portfolios away from cyclical industries. Also, they are usually guaranteed or supported by government or supranational entities and, when they need to make investments, their projects are huge and require large amounts of money. A drawback is the fact that they are often unknown outside their own countries.
So when UK utility North West Water decided to tap the international Eurobond market, becoming the first UK utility to issue in euros, bookrunners JP Morgan and ABN Amro had to do extensive pre-marketing work, explaining both the company and the UK regulatory environment that it is subject to.
After roadshows in Amsterdam, The Hague, Frankfurt, Zurich, Milan and Paris, the 10-year €500 million ($510 million) fixed-rate issue was launched on March 4, as the first deal off a previously signed €2 billion MTN programme.