Issuers of high-yield bonds are increasingly seeking information from fixed-income portfolio managers through investor surveys or "perception studies" conducted by Thomson Financial's Corporate Group business unit. Thomson has conducted such studies with equity investors for some 10 years, but only began polling fixed-income investors last July, says Justin Brimfield, senior associate in the fixed-income strategic intelligence group at Thomson Financial. Brimfield says fixed-income investors have been increasingly on the minds of corporate investor-relations executives because companies are issuing more debt. Other fixed-income executives say companies are fielding more calls from buy-siders as they lose faith in sell-side analysts and ratings agencies in the wake of recent blow-ups such as Enron and WorldCom.
One fixed-income money manager was greatly surprised when he received a recent call from Thomson asking questions about Mirant Corp. Among other questions, he was asked to identify Mirant's peers in the industry, to evaluate Mirant versus those peers and to explain what he would like to see the company do to address issues such as capital structure and liquidity. "I'd never taken a call like that before. It's almost as if they're asking bondholders to tell them what their strategy should be," he says. He assumes that the call was an indication of the extreme volatility in the bond prices of energy traders such as Mirant, in the wake of the Enron scandal and related issues. "You could see it as a good thing, but the flip side is, 'are they really in control?'" he asks.
Brimfield stresses that while he has sees increased interest in Thomson's services after the recent spate of corporate scandals, healthy companies also use the service as a defensive measure. He would not provide examples of questions Thomson asks, but says that they vary according to the needs of each company.
John Robinson, v.p. of investor relations at Mirant, says the energy trader has used Thomson's services in previous years to survey equity investors, and the practice should not be seen as out of the ordinary. As for the questions about issues such as liquidity and capital structure, he says, "Right now, those are the issues that are on investors' minds."