Sub-prime-induced volatility was cited as the reason for the withdrawal of a five-year and 10-year euro-denominated transaction by Arcelor. The lead managers – Calyon, Citi, Commerzbank and RBS – sent out a terse statement saying that the borrower would return when stability returned.
The lead managers approached the market with price talk: mid swaps plus low/mid 30 basis points on the five-year and mid 60 basis points for the 10-year. This was seen as quite punchy for a triple-B rated steel company. Unfortunately, in late June the European Crossover index was gapping wider and investor confidence in the deal was lost. Although other deals were postponed because of widening markets – including a US high-yield deal for US Foodservices and an emerging market transaction for MISC of Malaysia – these were not of investment grade.