Comcast Raises $2.2 Billion in Bond Sale After Time Warner Deal

Comcast Corp. (CMCSA) raised $2.2 billion in its first bond sale after agreeing to buy Time Warner Cable Inc. for $45.2 billion in stock last week.

The biggest U.S. cable operator issued $1.2 billion of 3.6 percent, 10-year notes to yield 93 basis points more than similar-maturity Treasuries and $1 billion of 4.75 percent, 30-year debt to yield 110 basis points more than benchmarks, according to data compiled by Bloomberg. Proceeds may be used for working capital and paying down debt, the data show.

The acquisition, which would combine the two largest U.S. cable companies, follows a rejected offer for Time Warner Cable of $132.50 a share from Charter Communications Inc. The Comcast bid valued Time Warner Cable shares at $158.82 each and the transaction, subject to approval by stockholders and regulators, is expected to be completed by the end of 2014.

“They’re trying to begin to prepare for any deal that might occur,” Jody Lurie, a corporate-credit analyst at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. “In the event the deal doesn’t go through, they still just want to have the cash on hand.”

The all-stock transaction to buy Time Warner Cable “is not expected to have a material impact on Comcast’s credit protection measures,” Fitch Ratings analysts led by David Peterson wrote in a report. The ratings company will grade Comcast’s debt offering A-, according to the report.

Housing Starts

The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark used to hedge against losses or to speculate on creditworthiness, increased 1.8 basis points to 66 basis points as of 5:21 p.m. in New York, according to prices compiled by Bloomberg. The measure was poised to reach the highest closing level since Feb. 10.

The swaps gauge typically rises as investor confidence deteriorates and falls as it improves. The contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

D.R. Horton Inc. (DHI), the largest U.S. homebuilder by revenue, issued $500 million of 3.75 percent, five-year notes that yield 221 basis points more than similar-maturity Treasuries and are rated Ba1 by Moody’s Investors Service, according to data compiled by Bloomberg.

Housing starts in January fell to an 880,000 annualized rate following December’s revised 1.05 million, the Commerce Department reported in Washington. The decrease was the biggest since February 2011. The median estimate of 84 economists surveyed by Bloomberg called for 950,000. Permits for future projects showed a smaller drop, a sign activity may stabilize as the weather improves.

U.S. Steel

“Even though economic data is not in their favor right now, investors haven’t completely written off the concept that the housing market is improving,” Lurie said.

The cost to protect the debt of U.S. Steel Corp. for five years rose as much as 33.5 basis points to 437 basis points, according to data provider CMA, which is owned by McGraw Hill Financial Inc. and compiles prices quoted by dealers in the privately negotiated market. That’s the biggest intraday increase since Jan. 24.

The Department of Commerce rejected the claim of the nation’s largest producer of the metal by volume that South Korea is selling steel tubing into the U.S. below cost.

The risk premium on the Markit CDX North American High Yield Index, tied to the debt of 100 speculative-grade companies, widened 10.2 basis points to 327.4, Bloomberg prices show. Speculative-grade bonds are rated below Baa3 by Moody’s and less than BBB- at Standard & Poor’s. A basis point is 0.01 percentage point.

The extra yield investors demand to hold investment-grade corporate bonds rather than government debt was little changed at 99.8, Bloomberg data show.

To contact the reporter on this story: Jessica Summers in New York at jsummers20@bloomberg.net

To contact the editor responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net

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