AMC Networks Sells $1 Billion of Junk-Bonds for Debt Repurchase

AMC Networks Inc. got traction in its first foray into the junk-bond market in four years, selling $1 billion of notes, $250 million more than what it initially sought.

The producer of shows including “Mad Men,” “The Walking Dead” and “Breaking Bad” issued the eight-year notes at a yield of 5 percent, according to data compiled by Bloomberg. That’s less than the 5.7 percent average yield investors demand to hold bonds of similarly-rated companies, according to Bank of America Merrill Lynch index data.

Proceeds will be used to repurchase AMC Network’s 7.75 percent notes due 2021, the company said in a statement Wednesday. Bank of America Corp. and Morgan Stanley arranged the sale.

AMC is “taking advantage of the interest rate environment to lock-in long term financing at attractive coupons,” according to a statement from Moody’s Investors Service. The credit grader rated the notes Ba3. The company has already announced plans to repurchase up to $500 million of its shares earlier this month.

“From a balance-sheet standpoint, they’re in pretty good shape,” said Derek Pines, a money manager at Bramshill Investments. “New issues continue to see pretty strong demand, especially high-quality BBs.”

The notes being repurchased have gained 5.6 percent over the past year compared with a 4.1 percent decline on the Bank of America Merrill Lynch U.S. High Yield Broadcasting Index.

“The high-quality media and cable names have performed well recently,” Bloomberg Intelligence analyst Stephen Flynn said.

Charter Communications Inc.’s $1.7 billion bond has gained 5.7 percent since it was issued in February, according to data compiled by Bloomberg.

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