Bonds get takeover boost

David Hellier
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THE price of Manchester United bonds, which have performed poorly since they were issued earlier this year, has risen in the past couple of days on the hope that the club might be taken over.

If this still unlikely event occurs, there is a change of control clause stipulating that the bonds must be redeemed by new owners at slightly over their issue price.

Says Jonathan Moore of Evolution Securities: “Most people do not think a takeover will happen but that has not stopped some investors from buying in the hope of making a quick profit.”

Manchester United, owned by the Glazer family, issued £500m worth of bonds in January in an effort to refinance the club’s large debts.

Despite a massive global marketing drive, the bonds struggled to sell and many traditional investors, worried by the large debts taken on by the Glazers in buying the club, stayed away from the issue.

Since they began trading, the bonds have traded below par and by the beginning of this week they had drifted down to 93p in the £.

However, the takeover speculation has helped drive the price up to 95p, bringing the yield on the bonds down to 9.8 per cent, from 10.4 per cent.

The bond issue has shone a light into the Glazer family’s finances.