Clear Channel Issues $2 Billion of Bonds in Bank-Loan Exchange

Clear Channel Communications Inc. issued $2 billion of bonds after the radio and billboard company said its offer to exchange term loans for the new notes was oversubscribed.

The 9 percent securities due in December 2019 yield 780 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. San Antonio-based Clear Channel said Oct. 22 that more than $8 billion of loans were submitted for exchange by the time the offer expired at the end of last week.

The so-called priority guarantee notes will be “fully and unconditionally” backed by the parent company and all “existing and future domestic wholly-owned restricted subsidiaries,” the company said in an Oct. 12 statement. The notes also will be secured by certain Clear Channel assets.

Clear Channel, controlled by Bain Capital Partners LLC and Thomas H. Lee Partners LP after a 2008 buyout, received permission from lenders this week allowing for the exchange of as much as $5 billion of debt. The new notes were rated Caa1 by Moody’s Investors Service, signaling the bonds are subject to very high credit risk. Standard & Poor’s graded the debt an equivalent CCC+.

To contact the reporter on this story: Charles Mead in New York at cmead11@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net