Bondholders gain upper hand in new debt deals

By Jennifer Ablan

NEW YORK (Reuters) - U.S. bond giant Loomis Sayles couldn't answer the calls fast enough in recent days from Wall Street bankers looking to sell new bonds to fund everything from stock buybacks to leveraged buyouts.

Now Loomis can take its time.

For the first time in years, the world's biggest bond managers are calling the shots, rejecting terms being set by underwriters attempting to raise billions of dollars in debt markets for Corporate America.

"Investors can influence more than just the pricing (on new deals) -- they now have a big say on whether the transaction gets done at all," said Mohamed El-Erian, the president and chief executive officer of Harvard Management Co., the world's largest educational endowment fund.

"The pendulum has swung," El-Erian said.

It's swung big time.

Bankers have failed to entice investors with new bond offerings, as eight U.S. junk-bond bond deals have been pulled since the start of June, and nearly a dozen high-yield offerings have been re-worked in order to get sold during the same period, according to Reuters Loan Pricing Corporation.