o Which business do you prefer to lend money, the overseas vacation giant or the online shopping genius?
That you know the answer right away tells us a lot.
Today ASOS launched a £ 500million bond offering for cash to invest in the future on which it is offering 0.75% interest – next to nothing.
Meanwhile, TUI, the package holiday giant whose core product has been fundamentally illegal for months, is looking for 400 million euros just to go through.
Is it the price for your money? Between 4.5% and 5%, a juicy return almost anytime and certainly tasty when Bank of England interest rates are 0.1%.
The highest coupon depends on the risk. TUI admits that lending him money is risky. The cash will be used to “improve its liquidity position” and repay “existing financial instruments”.
This is hardly TUI’s first refinancing during a pandemic that has cost it a loss of 3 billion euros and a debt of 4.2 billion euros.
Bankers will likely get rid of the TUI offer (Numis guys on the ASOS deal will make money for the jam), but they might have to earn their fees. (Don’t say it’s time.)
It is perhaps the societal role of bankers in a crisis which, for once, is not of their own initiative.
So far, the city can claim to have had a good war. Customers who need money to survive have it most of the time; those who weren’t convicted anyway.
We need innovative and less expensive ways of getting money to companies like TUI, whose difficulties are probably only temporary.