The British soccer club's budget assumptions are "fairly aggressive" that it will finish third in the Premier League, said Quentin Peacock, head of fixed income research at Liontrust, on Friday.
"It is an extremely powerful brand, but it is subject to a lot of vagaries and uncertainties," he said. "What happens if Sky subscriber numbers drop or Wayne Rooney breaks his leg?"
The coupon discussed at the roadshow for the seven-year bonds was around 8.5 to 9 percent, he said. "We would need to get paid significantly more than that. I would have to look at double figures before considering it."
Man United said earlier this week it would sell senior high-yield dollar and sterling bonds to help refinance the debt taken on the by United States's Glazer family to buy it.
Investor presentations took place in Asia and Europe this week and head to the United States on January 19 to drum up interest for the notes to replace existing borrowings secured against the club.
Its offering this week has kicked off a wave of deals as highly indebted European high-yield borrowers take advantage of increased investor appetite for higher yields to refinance bank and other expensive debt.
ONE-OF-A-KIND DEAL:
The Manchester United deal appears to be the only one so far from a sporting business, said Simon Thorp, Liontrust head of fixed income. "This is a totally different type of deal."
Its offering document included 14 pages detailing the potential risks in the deal, as opposed to a page and a half for most bonds, he said.
"From a business perspective, the deal doesn't suit us on a number of levels," Peacock said, citing reservations about the unpredictability of the club's revenues, its high leverage and lack of a credit rating.
The club's manager, Alex Ferguson, "is a big name and a significant reason it is so successful, and he is not getting any younger," he added. "That is probably a concern of a lot of investors, even though they are putting in a (succession) team underneath him." At the roadshow, the club cited margins of over 30 percent, but revenues have been beefed up by one-off sales of players, Peacock said.
The club would have posted a loss for the year to end-June 2009 without the sale of winger Cristiano Ronaldo to Real Madrid for a record transfer fee of 80 million pounds ($130.7 million).
Liontrust tends to prefer high-yield deals backed by more stable revenues such as cable companies, which might yield less but for much less risk, Thorp said.