The market reaction to the announcement that McDermott International (MDR) secured $1.7 billion of loan financing has got to leave a neutral observer scratching their head. Clearly, the market reaction showed that logic was in short supply. The announcement of any financing was a major accomplishment for a company in the predicament of McDermott International.
Clearly, the lenders saw something there that was worth lending. Lenders generally do not grant 10% loans of that magnitude to a company about to go under. On the other hand, a secured loan of 10% does indicate