French chemicals firm, Rhodia (BBB-, stable/Baa3, negative) is still a name listed on the new issue pipeline, but it seems the market may be waiting in vain for the borrower to launch its planned €300-€500 million deal.

Lead managers BNP Paribas, HSBC and Fortis say the deal has been postponed and they are unable to provide any new information, blaming the high-yield premium demanded by investors for the postponement. But some wonder whether the deal will actually surface at all.

Says Mustaq Rahaman, industrials analyst at Société Générale in London: “To me it looks like it is cancelled, rather than postponed. Rhodia has already refinanced €300 million of maturing debt via a private placement in the US, and given the poor state of the new issue market, it is unlikely they would bring a deal this year.”

A London-based head of syndicate from a bank not involved in the deal says investors shunned Rhodia due to its deteriorating credit profile.

Some analysts believe that the company will be kicking itself now for not launching the deal sooner. Says one industrials analyst: “Maybe in hindsight Rhodia, along with other companies that postponed their deals before the summer, will think that the spreads achievable then were actually better than what is achievable now.

“The reality is that the market would not absorb the deal at the level that Rhodia wanted and you could judge it as a pulled deal. If it came tomorrow, Rhodia would be looking at 400-500bp over Libor, in comparison with the mid-300bp area in early June,” adds the analyst.

Though conditions in the corporate bond market improved throughout September, this was still not enough for many corporates to brave re-entering the market.

“There is no visibility in the market,” says Jens Jantzen, industrials analyst at Bear Stearns. “It is very difficult for triple-B names to print a deal, especially those from the more difficult cyclical sectors.”

“It has become a credit-specific environment,” says Eden Riche, head of European syndicate at Lehman Brothers, “and any wind of event risk sends sentiment spiralling, especially on the lower-rated credits. This is the first bear cycle in the credit markets since the explosive growth we have seen in corporate issuance, and we are venturing into uncharted territory.”

Lafarge and Parmalat last month joined a list of companies including Endesa, Electricité de France, Vattenfall, Transco, TXU and Vinci in announcing a halt to their issuance plans, but it seems that utilities are having the most difficulty accessing the market.

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