By Andrew Willis
The beleaguered forest product sector is catching a rare break, as a receptive U.S. high yield market gives these capital hungry companies an opportunity to lock in long-term loans.
Paper-maker Cascades (OTCPK:CADNF) raised $250 million (U.S.) on Wednesday in a well-received 10-year high-yield bond offering. The debt pays features 7.875% interest rate or 470 basis points over the comparable U.S. government bond
Cascades is a double-B rated credit, which is one notch below investment grade. In recent months, bond markets have reopened for non-investment grade borrowers like this. It’s a critical development in this sector, as many forest products companies need to spend on equipment to remain competitive, and survive a bruising downturn.
Bank of America/Merrill Lynch led the Cascades financing.