Bondholders in particularly hard-hit sectors like energy, travel and leisure have another issue to watch for as companies struggle to survive the economic shutdown: Getting 'primed' by kateduguid
), according to a Reuters analysis. Of the new issues currently trading, all are priced far higher than where the remainder of the company’s debt is trading.
AMC Entertainment, which had faced industry-wide headwinds prior to the pandemic, approached the debt market with generous terms on a $500 million bond: secured debt and a hefty coupon of 10.5%, about twice the cost of its previous issues. The past decade of cheap borrowing and low yields has allowed issuers to chip away at traditional investor protections.
The last sustained spate of priming happened during the energy crisis of 2014-2016 which saw companies like Energy XXI offer a $1.45 billion secured deal in March 2015, demoting its unsecured bondholders.
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