Time Warner sells in two tranches, tightens in secondary, as tone improves

By Aleesia Forni and Andrea Heisinger

New York, June 8 - There was a two-tranche sale in the market on Friday from Time Warner Inc., capping a week that saw a backlog of deals come out.

Time Warner priced $1 billion of guaranteed bonds due 2022 and 2042. The deal continued a week-long trend of offerings pricing lower than guidance.

Both tranches were seen tighter in the secondary near Friday's close, a market source said.

There was a little more than $14.5 billion in new deals in the past week, according to data compiled by Prospect News. This was at the top end of the range of $5 billion to $15 billion that was given for the week.

The coming week should see the flow of offerings continue if the tone holds.

The range of volume is again likely to be between $10 billion and $15 billion, a syndicate source at a busy desk said.

"I know we'll have a couple that will look [Monday]," a source said, adding that that only applies if "nothing disastrous happens over the weekend."

The fact that there was a rare deal in Friday's primary was a good sign for the market, and will give it momentum.

"The tone definitely got better throughout the day," the syndicate source said. "Hopefully we can keep it going."

Time Warner's $1 billion

Time Warner priced $1 billion of notes and debentures (Baa2/BBB/BBB) in two tranches, a source close to the trade said.

There was about $8.3 billion in demand from investors, the source said.

The $500 million of 3.4% 10-year senior notes sold at a spread of Treasuries plus 180 bps. The spread is tighter than initial talk in the 200 bps area, the source said, and at the low end of revised talk in the 185 bps area.

A second part was $500 million of 4.9% 30-year senior debentures priced 225 bps over Treasuries. This is also tighter than initial guidance in the 245 bps area and revised talk in the 230 bps area.

The 10-year tranche was seen 3 bps tighter in the secondary, trading at 177 bps bid near the end of Friday's session.

Additionally, the 30-year tranche was also tighter. The notes due 2042 tightened 5 bps to 220 bps bid near close, according to a market source.

Bank of America Merrill Lynch, Barclays Capital Inc., BNP Paribas Securities Corp. and Citigroup Global Markets Inc. were active bookrunners.

Proceeds are being used for general corporate purposes.

The deal is guaranteed by Historic TW Inc., which is guaranteed by Home Box Office, Inc. and Turner Broadcasting System Inc.

New York City-based media and entertainment company Time Warner was last in the market with a $1 billion offering in two parts on Oct. 12, 2011. The 4% notes due 2022 from that sale priced at 200 bps over Treasuries while a 5.375% 30-year bond sold at 225 bps over Treasuries.

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