Читать книгу Applied Mergers and Acquisitions - Robert F. Bruner - Страница 90

Public and private corporations have trillions of dollars in debt securities outstanding. The prices and trading in these securities yield insights into economic conditions.

 Debt yields and their associated risk premiums. Debt yields¹⁸ are excellent indicators of risk, and therefore may be useful sources of insights about strategic themes. The more risk one takes, the more one should get paid. This axiom is reflected daily in the pricing of debt securities. The acquisition search analyst should examine both the absolute yields in target businesses, and the risk premium in those yields. This premium is measured as the difference between the yield on a corporate debt instrument, and the yield on a contemporaneous government debt instrument. The premium increases as risk increases. The analyst should review the yields and premiums for candidates cross-sectionally in an industry and scrutinize outliers in risk. Also the analyst should consider trends and changes in risk over time. Divergence in yields among firms in an industry, or material changes in risk premiums are probably evidence of strategic themes.

 Credit ratings. Publicly traded debt issues are ordinarily rated for creditworthiness by rating agencies. Here, “creditworthiness” refers explicitly to risk of default in servicing the issue. The analyst should scrutinize the ratings of issuers in the target industry for consistency among the players. Outliers will have an interesting exposure to strategic forces. Also, rating changes are unusual and especially noteworthy—the acquisition analyst will find in these events one or more strategic themes. But it is also important to note that rating changes usually occur well after investors have recognized the need for a change. A better and more timely focus of attention would be the risk premiums for corporate debt over the yield on contemporaneous government debt issues.

 Maturity or duration for typical debt issues. The maturity structure of a firm’s liabilities offers clues about the expectations of insiders and creditors about the firm’s future cash flows, and about the nature of the assets standing behind those debts. The acquisition search analyst could compare the maturity structures for firms in a target industry, and check the extent to which those structures have changed over time. The classic advice to corporate borrowers is to set the life of their liabilities equal to the economic life of their assets. To mismatch these two lives is to expose the firm to financial risk.¹⁹ While it is notable that most firms ignore this advice, it is a useful starting point for the analyst since the direction of the mismatch can help the search analyst reveal strategic themes. The main difficulty with maturity matching analysis is in determining the average maturity of a firm’s assets; there is no rigorous way to do this.

  Covenants or security pledges for typical debt issues. Lenders and investment bankers who specialize in financing a given industry can offer insights into the practices of structuring corporate debt issues in those industries. The reasons for those practices often give fascinating insights into the risks and strategic themes faced in those businesses.