Last week Transurban was on a roadshow through Europe plugging a mooted 8 year FRN issue. It is now understood the plug has been pulled on the planned issue, even though the company was reported to have received enough bids to raise the funds in question. Volatile market conditions are believed to be behind the decision which leads to the likely conclusion that Transurban decided not to accept the terms required by the bidders.
The first two months of 2016 have been good to both bond holders and bond sellers. Bond holders have seen the value of their bonds rise as yields have fallen. Bond issuers have been able to use the low yields to issue debt at multi-decade low interest rates. However, the catch in both cases is the assumption the debt is issued by a sovereign debt or it is well above junk (or as it is more politely known nowadays, high yield) status.
In Transurban’s case it has a group level credit rating BBB+ while its subsidiary Transurban Queensland, which often issues debt, is one rating lower at BBB. So its credit rating is quite respectable, has investment grade status and is two or three notches above high yield. Nevertheless, while benchmark yields are low, it seems as if the spread Transurban was asked to pay proved to be unacceptably high.