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Investors Wary of Trump's Bond Offering4 February 2003NEW YORK – As reported by the New York Times: "The developer Donald Trump is hoping to raise $470 million in junk bonds, almost nine months after he canceled a similar offering because investors demanded too high an interest rate. "Trump is betting that stronger financial results at his casinos, and increased demand for junk bond offerings, will allow him to raise money at a lower interest rate than he could have received last May, when he pulled the earlier financing. But some junk bond investors briefed on the terms of the latest deal said they were still wary of Trump. "Many bondholders remain angry with Trump for threatening to default on some of his casinos' debt in October 2001, when he argued that a weak economy after the terrorist attacks made the outlook for his casinos uncertain. He ultimately paid the interest. "…Trump is planning to offer a rate of 11 percent, according to investors who have been briefed on the proposal, 2 percentage points below what he would have paid last spring. That is still substantially higher than the 8 percent to 9 percent rate on recent bond offerings from other casinos, said Barbara Cappaert, an analyst at KDP Investment Advisors, a research firm that specializes in junk bonds. "…Given Trump's reputation, the investment bankers underwriting the debt, which include Deutsche Bank as well as Credit Suisse First Boston and UBS, have been informally meeting with prospective investors over the last week and a half to gauge interest before beginning to market the bonds next week. "Through the offering, Trump hopes to raise $470 million for a newly formed entity called Trump Casino Holdings…" |