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Manchester United bonds dip in trading

David Hellier
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THE new bonds issued by Manchester United last week are trading below par, it emerged yesterday.
The £500m worth of bonds were trading at between 93-94p yesterday afternoon, meaning they were yileding more than 10 per cent.

Analysts said that tradional high income investors were wary of the bonds because of the high debts the company has compared to its earnings.

Figures released alongside the issue of the bonds disclosed borrowings in excess of £700m for Manchester United, the Premier League football club whose revenues are tied to performances on the pitch.

The high levels of debt at United have attracted criticism from Prime Minister Gordon Brown and also from Goldman Sachs star economist Jim O’Neill, a United fan, who said “there’s too much leverage going on with Manchester United” shortly after completing an interview on China’s currency policy.

United followers such as O’Neill criticise the Glazer family for loading the club up with debt after their 2005 acquisition and then taking cash out of the club since the takeover.

Paul Marshall, co-founder of hedge fund Marshall Wace, has called for the “club’s supporters to combine forces to return the club to where it belongs”.

There are bound to be continuing demonstrations against the Glazers at tonight’s Carling cup semi-final against bitter rivals Manchester City.

High yield analysts such as Jonathan Moore at Evolution Securities argue that the reason the bonds have been taken up is because the club arranged an extensive global roadshow to appeal to the broadest possible group of investors.

United’s roadshow, headed up by chief executive David Gill, went to the US, the far east, as well as Edinburgh and London.

Goldman Sachs and a group of other City banks shared in advisory fees of around £15m for putting the bond deals together.