Issuer: CalEnergy
Lead managers: Credit Suisse First Boston, Lehman Brothers
Amount: $1.4 billion
Date: September 1998
Back in the gloomy days of September, it was difficult enough for well-established high-grade borrowers to tap the debt markets. Single-A credit Ford had pulled a bond deal, and the reopening of the US equity markets was still 10 days away. Rather surprisingly, then, it was a $1.4 billion issue from a sub-investment-grade corporate which kick-started the markets.
CalEnergy’s deal was launched four weeks after the Russian collapse and quickly sold out. “The benefit of doing the deal at a time when the markets were all but closed is that we had the undivided attention of investors,” says Adebayo Ogunlesi, managing director and head of project and utility finance at joint bookrunner Credit Suisse First Boston. “We had a four-day roadshow for the deal and met 175 investors. Of course, some of them were no doubt there out of morbid curiosity, but it showed that there was real interest.”
The question is why. First, despite being a sub-investment-grade credit, CalEnergy is one of the most respected names in the US corporate market, largely thanks to chief executive David Sokol.