Bond issue buys Glazer time

David Hellier
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MANCHESTER United has managed to successfully price its dual tranche £500m bond at below 10 per cent, despite scepticism from some traditional high yield investors amid growing concerns about the level of the Premier football club’s debts.

According to sources yesterday, United’s bank advisers were leaning towards pricing one tranche of the bond at 8.75 per cent and the other at nine per cent.

Such pricing will be viewed by the banks as a success given that some high yield analysts such as Jonathan Moore at Evolution Securities predicted that a 10 per cent yield might have been necessary to attract investors.

Moore said yesterday: “In fairness to the company they did present well and they went to every corner of the world.” United went to the far east and the US as well as the UK.

The Manchester United pricing compares with a likely 10.75-11 per cent yield being proposed for the Italian directories publisher Seat Pagine for its £500m bond.

Moore said factors influencing demand for the bond included the fact that some hedge funds were already invested in the football club’s debt and therefore were comfortable with the risks involved.

“This market is strong so it’s hard for a deal not to get done in this type of environment,” Moore said, citing the example of Virgin Media which was able to triple the size of its bond thanks to a high level of demand.