Manchester United’s £500M bonds failing

Manchester United’s success on the pitch is not encouraging traders to buy the bonds they sold two weeks ago.

They successfully raised £500 million to refinance the serve debt burden on the club. 250 million in pounds and 425 million in dollars.The former are now selling at 93% of their initial value, whereas the latter are selling at 94.5%.

The bonds guarantee a return of a set percentage, added onto the overall amount every year and payable in 2017 when the bond matures, but the uncertainty over the club’s ability to pay back the sums when 2017 comes around has led to traders selling them at a loss.

“For investors this is bad news because it means you have made losses if you are marking to market,” Jonathan Moore, analyst at Evolution Securities told the FT.

Other bond issues have actually risen in value despite the credit crunch, while Manchester United’s are amongst the worst performing over the last year.

“In a benign credit market, Manchester United is one of the worst performing bonds since the beginning of 2009,” said Suki Mann, credit strategist at Société Générale.

The Glazer family are expected to wait and see how the team performs in the Champions League before returning to the market.

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