Charter Communications prices $1.5 billion notes to strong demand; supply to stay thin

By Cristal Cody

Tupelo, Miss., June 28 – Charter Communications, Inc. tapped the high-grade primary market on Thursday as the sole reported issuer.

The company sold $1.5 billion of senior secured notes (Ba1/BBB-/BBB-) in two tranches with a combined final book size of $3.6 billion.

The notes were seen in aftermarket trading 2 basis points to 5 bps tighter.

In other new issuance on Thursday, the Province of Quebec brought a Canadian-dollar denominated offering that was registered with the Securities and Exchange Commission.

More than $4 billion of investment-grade corporate bonds have priced week to date.

Market sources had forecasted about $15 billion to $20 billion of volume with some predicting as little as $5 billion of new issuance for the week.

Other issuers that have been marketing expected bond offerings over the week include Toyota Motor Credit Corp.

Toyota Motor Credit has held fixed-income investor calls that began in the United States, Europe and Asia on Tuesday for three tranches of the SEC-registered senior notes, according to a market source.

Supply is expected to remain light until mid-July when bank and financial issuance likely will ramp up following the end of second quarter earnings blackout periods, according to market sources.

The Markit CDX North American Investment Grade 30 index closed mostly unchanged at a spread of 68 bps.

Charter raises $1.5 billion

Charter Communications subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. priced $1.5 billion of senior secured notes (Ba1/BBB-/BBB-) in two tranches in the offering on Thursday, according to a market source.

The companies sold $400 million of floating-rate notes due Feb. 1, 2024 at Libor plus 165 bps, compared to initial price talk at Libor plus 195 bps. The floaters had a final book size of $750 million.

Charter priced $1.1 billion of 4.5% fixed-rate notes due Feb. 1, 2024 at a Treasuries plus 180 bps spread. The notes were initially talked to price with a spread of Treasuries plus 195 bps. The issue had a book size of $2.85 billion.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., Mizuho Securities USA Inc., RBC Capital Markets LLC, UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners.

In the secondary market, the floaters tightened to 160 bps bid, while the fixed-rate notes firmed to 178 bps bid, the source said.

Charter is a Stamford, Conn.-based broadband communications company.

Quebec brings deal

The Province of Quebec (Aa2/AA-/AA-) sold C$500 million of 2.6% seven-year global notes on Wednesday at a spread of 52.5 bps over the Government of Canada benchmark in the SEC-registered offering, according to an FWP filing with the SEC.

The notes priced at 99.784 to yield 2.634%.

CIBC World Markets Inc., HSBC Securities (Canada) Inc., RBC Dominion Securities Inc. and TD Securities LLC were the bookrunners.

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