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London: British cable operator Virgin Media plans to sell a two-part bond, with an expected size of $650 million, to term out its financing and to take advantage of the reopening of the European high yield market.
The bond sale will consist of a seven-year dollar-denominated senior issue, callable after four years, and a possible eurobond, IFR reported on Thursday, and proceeds will be used to pay down loans due in 2010 to 2012.
European high-yield bond issuance has seen tentative signs of revival in the past couple of weeks, with deals coming from Nordic papermaker Stora Enso and Dutch cable operator UPC.
"It's certainly an interesting deal and Virgin Media is one of the better names out there," said Patrick McCullagh, head of European and UK credit research at Schroders.
"The company has a good product mix, it is generating cash and it offers good value with CDS trading higher than some of its peers," he added.
Five-year credit default swaps on Virgin Media are around 555 basis points, some 130 basis points wider than sector rival Kabel Deutschland, Markit data shows.
Guidance details are expected after a global investor call, due at 1500 GMT on Thursday.
UPC sold a two-part note last week, raising $605 million via a dollar bond and a tap of an existing euro bond, while Stora Enso raised 200 million euros, also via a tap. There have been only three European high-yield bond issues since June 2007.
BNP Paribas, Calyon, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan and Royal Bank of Scotland are managing the sale of the bond and a global investor call is taking place at 1500 GMT on Thursday, added IFR, a Thomson Reuters online news and market analysis service.
JP Morgan is the lead bookrunner on the US bond, while Deutsche Bank is the lead bookrunner on the euro bond, IFR said.
Virgin Media is rated B+ by Standard & Poor's and BB- by Fitch Ratings.
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