With all the attention on the big banks and the tens of billions in new capital those banks have been able to raise over these last few weeks, it’s easy to miss the fact that companies from a diverse group of industries and with a diverse group of credit ratings have also plunged into the debt and equity markets.
It was only a few months ago that one was left to wonder how highly leveraged companies such as casino operator Harrah’s could ever raise or refinance debt, but even that beleaguered, heavily leveraged giant has been able to extend maturities and refinance a part of its capital structure. One senior banker recently told me he was advising all his corporate clients to “barrel through the opening” in the capital markets by raising as much money through debt and equity offerings as possible.
Many companies seem to be taking that advice and each day the debt and equity markets remain receptive to such offerings is another day that companies once thought certain bankruptcies may be able to breathe new life into their future.
A perfect example is American Tower.
Not long ago this company would have found itself unable to extend maturities on its outstanding debt. But last week it issued $300 million in senior unsecured notes due in 2019 with a rate of 7.25%.
The proceeds will be used to retire debt that was coming due in 2012. Now, American Tower can rest easy about its ability to run its business.
I use AMT as an example because there are countless other corporations just like it that don’t make the headlines which have been sweating out how they are going to refinance debt that comes due in 2010, 11 and 12. The cooperation of the debt market in the last month for non-investment grade companies has been a great relief to many of them.
If there has been one lesson learned from the credit crisis and the ensuing economic crisis it is that there is NEVER a bad time to raise capital. While Wall Street is hopeful this window of opportunity will remain open for a long time to come, the companies that found themselves shut out were probably smart to have made their move to jump through it, rather than wait.