Printer Friendly

AT&T prices $450 million bond offering.

Blaylock & Partners, Utendahl and Williams Capital among co-managers in historic deal

An interesting future awaits minority investment bankers with corporate-bond clout as a three-year, $450 million AT&T bond issue, which closed late last year, is touted as one of the largest all-minority, woman-managed financing deals.

Instrumental in the deal was AT&T Chairman and CEO Michael Armstrong, who made a capital markets commitment at last year's Wall Street Project conference. Five African American-owned firms, one Latino and one woman-owned firm participated. Joint lead managers were Blaylock & Partners L.P. and Utendahl Capital Partners L.P. The Williams Capital Group served as senior co-manager, while Loop Capital Markets L.L.C., Ormes Capital Markets Inc., Ramirez & Co. Inc. and Muriel Siebert & Co. Inc. served as co-managers.

While many firms specialize in municipal bonds, equities or securities, AT&T sought broad expertise and distribution capability for its corporate bonds. Each firm's capital base was also weighed in the choice.

Blaylock & Partners had previously proven its prowess as a co-manager in AT&T's gigantic $8 billion global transaction last March. Larger, older Wall Street co-managers did no better than this solitary minority firm in bringing in new investor demand. Serving primarily middle-tier institutional investors with $1 billion to $5 billion under management, Blaylock on its own can underwrite up to a $1 billion offering in investment-grade debt. For Utendahl Capital Partners, corporate debt makes up $120 billion out of its total $420 billion in underwriting transactions since 1992. Its five-year relationship with AT&T includes research, corporate finance and a financial advisory role on merger and acquisition deals.

Traditional Wall Street firms tend to embrace the same institutional investors--large and midsize institutions. Corporations generally desire new "names" to buy and hold their bonds. A broader base of institutional investors means better securities pricing, lower borrowing costs, a better bottom line and higher earnings per share.

"In the all-minority-and-woman transaction that we just did, we saw a lot of smaller institutions that had participated, names that weren't familiar to us," says Edward M. Dwyer, AT&T's vice president and treasurer. "Whenever an investment bank can identify for you a new corner of demand, that can translate into basis-point savings for the issuer."

Previously untapped buyers accounted for nearly 30% of both names and total orders. Thirteen percent of the accounts and almost 20% of the orders went to minority-owned investment managers.

The transaction was a huge success. AT&T originally expected $300 million, but the seven firms built a collective demand of $680 million. AT&T subsequently raised the bond offering to $450 million.

Second- and third-tier institutional investors manage less than $5 billion. Blaylock dug up demand by focusing on these institutions, often overlooked as targets of new bond issues. Possessing its own billion-dollar asset-management firm, Utendahl even belongs to the base of small institutional investors AT&T wished to reach. Williams found the offering presented a venue for nonminority money managers whose clients require a percentage of their account's business be done with minority-owned firms.

So where does this AT&T experience stand in the investment bankers' growth trajectory?

"Any time we are co-manager, it does help our firm grow," says Christopher Williams, president of the Williams Capital Group. "The more bonds of a variety of issuers that you are able to provide to your investors, the more attractive, the more valuable we are as a brokerage relationship."

"It's another milestone in showing our ability to act as a lead manager and play a significant role to corporate America," says Ronald E. Blaylock of Blaylock & Partners.

AT&T was one of last year's most talked about enterprises, and its vote of confidence may be a cue for other companies.

"It helps set the tone and, hopefully, establishes another shift in the paradigm out there for minority firms to convincingly be in book-running roles on deals going forward," says John O. Utendahl, chairman and CEO of Utendahl Capital Partners.

Utendahl's AT&T follow-up foretells a bright future in the business. In September the firm broke new ground as sole lead manager in a 10-year $300 million investment-grade bond issue by Coca-Cola Enterprises Inc.
COPYRIGHT 2000 Earl G. Graves Publishing Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:Hocker, Cliff
Publication:Black Enterprise
Article Type:Brief Article
Geographic Code:1USA
Date:Jan 1, 2000
Previous Article:Moments in time.
Next Article:Balancing acts.

Related Articles
Telecommunications Reports and law firm launch e-Law Online Monitor online.
Institutional Trading Technology focuses on information and trading systems.
Budget deficit causes slip in bond rating.
MTA gets $21b budget share.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters