NTL takes up high-yield reins


NTL will return to the high-yield market with £800 million equivalent of 10-year senior notes. The bonds, which are sold through new subsidiary NTL Cable, will be issued in euros, sterling and dollars.

NTL emerged from bankruptcy last year after Europe’s largest corporate default. The proceeds will be used to help repay NTL’s £2.785 billion outstanding senior credit facility. NTL is also borrowing £2.425 billion through a syndicated bank loan.

Moody’s and Standard & Poor’s rate the bonds B3/B-. CSFB, Deutsche Bank, Goldman Sachs and Morgan Stanley arranged the deal.

Meanwhile, former NTL subsidiary Cablecom issued its first bond, a €290 million 10-year note. The bond is callable after three years and is rated CCC+ by Standard & Poor’s, and Caa1 by Moody’s. Deutsche Bank, Goldman Sachs and JPMorgan have arranged it as part of a €1 billion refinancing programme.

The two cable deals join a slew of new issuance from the high-yield sector. While investment-grade supply remains stilted, the high-yield pipeline for March and April totals over €7 billion. Many of these are leveraged buyout deals, such as MTU Aero Engines and UK boiler-maker Baxi.

Robert Jones, high-yield analyst at Barclays Capital, says: “It has taken a while for these leveraged buyout deals to come to market, but they are finding that the underlying demand for the asset class is still extremely strong.”

Many of the deals are aggressive in purpose. While the collapse of the Jefferson Smurfit deal may show that investors will not buy bonds that are issued just to pay dividends to equity sponsors, many of the new deals are aimed simply at refinancing bank debt.

At the time of press, the European high-yield market had either seen, or was expecting issuance from the following names: German aeronautical engineer MTU Aero Engines, Irish educational software provider Riverdeep, Irish packaging firm Clondalkin, French chemicals firm Rhodia, US tractor manufacturer Agco, UK retailer Debenhams, Italian phone directory Seat Pagine Gialle, Norwegian oil rig engineer Aker Kvaerner, German industrial group ThyssenKrupp, global chemicals company Celanese and Japanese software provider Softbank. UK industrial firm Invensys issued a €1.2 billion equivalent deal in February.

“There seems to be lot of private equity money to invest at present,” adds BarCap’s Jones.

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