Northwest postpones debt offering, cting weakness of market
ST. PAUL, Minn. -- Northwest Airlines said it postponed a $350 million debt offering, citing weakening conditions in the bond market.</br></br>"Recent concerns about the economy have forced up interest rates," said Mickey Foret, the airline's chief financial officer. "With some $2.5 billion in high-yield issues coming to market in the near future, we have decided that this is not the best time to sell bonds." He added the airline would "continue to monitor the market and proceed when conditions are appropriate."</br></br>Monday, the carrier said it had no plans to postpone the offering, which was shaping up as one of the week's most closely watched deals. According to analysts, the company hoped to offer an 11% interest rate on the 10-year bonds, but Wall Street observers began to doubt the airline could sell the debt because potential investors demanded a coupon of 12% or higher.</br></br>Northwest officials "thought they had a window, and it closed," said Glenn D. Engel, an airline analyst for Goldman, Sachs & Co. "They were overly aggressive in pricing and the bond market was out of their control."</br></br>Northwest planned to use proceeds to pay down bank debt and upgrade its fleet. The airline must raise $500 million by 1996 as part of a restructuring agreement. This month, it raised about $250 million in an initial public offering. Mr. Foret said the company has about a $1 billion in cash and added, "There is no need for the company to undertake this transaction now."