How quickly times change.
Six months after HBO and Warner Brothers owner Time Warner enjoyed the byproduct of the race into negative yielding debt — low borrowing costs — it is feeling the effects of the sell-off that has reverberated across fixed income markets.
The company was dealt far higher borrowing costs on Tuesday as it sold $1.5bn of debt compared to a May 2016 offering of similar notes, US capital markets correspondent Eric Platt reports.
The New York-based group sold new 10-year bonds with a yield of roughly 3.84 per cent on Tuesday, up from 3.099 per cent at a May sale.
The jump has been propelled by the sell-off in US Treasuries, which have slid after Donald Trump’s surprise US election victory. Yields on 10-year US Treasuries have climbed 54 basis points from when Time Warner last tapped bond markets in May to 2.29 per cent. Yields rise as bond prices fall.
The new bonds priced with a spread, or the difference between the bond and the benchmark 10-year Treasury, of 155 basis points. That is up from the 135 basis points Time Warner secured in May, but tighter than initial price talk on Tuesday of between 175 and 180 basis points.
One portfolio manager familiar with the deal said investor orders hit $4.5bn.
The media conglomerate earlier this year agreed to an $85bn takeover by telecommunications group AT&T and said the new debt would be used to purchase some of its outstanding bonds.