1987 - Year of the shrinking market?
There is no doubt which corporate Eurobond caused most excitement in 1986: British Telecom's autumn debut in the international debt markets, following its privatisation in 1985. The $250 million 10-year deal, launched by Morgan Guaranty Limited, was sold in minutes. "It's the best corporate credit in Europe--the issue amount could have been doubled and the price wouldn't have moved,' claimed the head of trading at one Eurobond house.
But anybody looking for a steady stream of financing business from the Triple-A rated company in 1987 will be disappointed. Not only is BT's balance sheet static, with 1 billion of liquidity and evenly spread debt maturities so readily serviced from its cash flow that there is no pressure to build up a war chest of funds, but the company's management is wary of attracting criticism from Britain's Labour Party (already pledged to return privatised companies to the public sector should it be voted into power) if it engages in money-spinning activities through its treasury.
"We just don't have the engine of an active financing programme,' said Christopher Bull, BT's corporate treasurer. "The only point of using sterling CP, for example, would be for arbitrage.'