By Paul A. Harris and Devika Patel
Knoxville, Tenn., June 28 – Charter Communications, Inc.’s subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. priced a $1.5 billion sale of senior secured notes in two tranches, including an add-on to its 5.375% senior secured notes due May 1, 2047, on Wednesday, according to a press release and a market source.
The company sold $1 billion of 3.75% long 10-year fixed-rate notes at 99.166.
The tranche priced at Treasuries plus 165 basis points. The deal came tight to final spread talk in the 170 bps area and inside of initial guidance in the 180 bps area.
Charter also priced a $500 million reopening of its 5.375% 30-year notes at 106.529.
The add-on came at a 220 bps spread, tight to final talk in the 225 bps area and inside of guidance in the 235 bps area.
The company originally sold $1.25 billion of the notes on March 30 at 99.968 to yield 5.377%, or 235 bps over Treasuries. The total outstanding now is $1.75 billion.
BofA Merrill Lynch and Deutsche Bank Securities Inc. were the active bookrunners for the latest deal, which was sold under Rule 144A and Regulation S.
Proceeds will be used for general corporate purposes.
The high-grade deal follows an unsuccessful attempt a week ago by Charter to price junk-rated bonds.
As with last week’s pulled unsecured deal, Charter intends to use the proceeds from the secured notes for general corporate purposes including potential buybacks of the class A common stock of Charter or common units of Charter Communications Holdings, LLC.
To recap, on June 22 Charter withdrew $1.5 billion of senior unsecured notes due 2028, stating that terms and conditions available in the market were not sufficiently attractive.
Market sources said at the time that bond investors and the company were by no means close in terms of how the unsecured deal ought to be priced.
Charter was seeking to raise the $1.5 billion at 4 5/8%, but was able to generate only $1 billion of orders at 4 7/8%, according to a bond trader.
Another trader said that given initial talk of 4¾%, Charter would likely have been happy to take the deal at 4 7/8%, but apparently failed to generate sufficient interest at the higher level.
The issuer is a Stamford, Conn.-based broadband communications company.
| Issuer: | Charter Communications Operating, LLC and Charter Communications Operating Capital Corp.
|
| Amount: | $1.5 billion
|
| Description: | Senior secured notes
|
| Bookrunners: | BofA Merrill Lynch and Deutsche Bank Securities Inc. (active)
|
| Ratings: | Moody’s: Ba1
|
| S&P: BBB-
|
| Fitch: BBB-
|
| Trade date: | June 27
|
| Settlement date: | July 6
|
| Distribution: | Rule 144A, Regulation S
|
|
|
| Ten-year notes
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| Amount: | $1 billion
|
| Maturity: | February 2028
|
| Coupon: | 3.75%
|
| Price: | 99.166
|
| Spread: | 165 bps
|
| Talk: | 170 bps area, from 235 bps area
|
|
|
| Thirty-year notes
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| Amount: | $500 million reopening
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| Maturity: | May 1, 2047
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| Coupon: | 5.375%
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| Price: | 106.529
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| Spread: | 220 bps
|
| Call: | Make-whole call at Treasuries plus 35 bps until Nov. 1, 2046, then at par
|
| Talk: | 225 bps area, from 235 bps area
|
| Total outstanding: | $1.75 billion, including $1.25 billion priced on March 30 at 235 bps over Treasuries
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