When times get tough, the tough stay home and watch cable television.
"If you can't afford to go to the movies, if you can't afford to go out, you stay at home and watch HBO," said Kingman Penniman, a senior vice president at Duff & Phelps/MCM Investment Research Co.
So Cablevision Industries Corp. has become the fifth cable outfit to take advantage of strong investor interest this year.
Cable firms whether tough economic times better than some other types of high-yield issuers such as cyclical, retail, or energy-related companies, he said. That helps make them popular with investors, Mr. Penniman said.
"Cable companies are in vogue and have been for some time," Mr. Penniman said.
"Investors are comfortable with the industry, and cable companies have a large appetite to refinance high-cost debt," he said.
"It's a good time to access the high-yield market," agreed Rocco B. Commisso, Cablevision Industries' chief financial officer. The company yesterday announced plans to issue $150 million of senior notes due 2002.
Four other cable television companies -- Tele-Communications Inc., Viacom Inc., Century Communications Corp., and Comcast Corp. -- have already brought deals this year, he said.
Cablevision Industries will use proceeds from the offering to redeem at par or repurchase a portion of its 15 1/4% senior subordinated discount notes due 1996, Mr. Commisso said.
The amount of 15 1/4% debt currently outstanding totals approximately $193 million, he said. The company has no immediate plans to refinance the remaining $43 million, Mr. Commisso said.
Cablevision Industries also has not decided whether it will call the debt at par or repurchase it on the open market, he said. Under the original underwriting agreement for the 15 1/4% notes, the company can call them at par beginning on Dec. 16, Mr. Commisso said.
Morgan Stanley & Co. will be lead manager on the offering, with First Boston Corp. and Lazard Freres & Co. serving as co-managers.
Also in the high-yield market yesterday, Safeway Inc. issued $300 million of 10% senior subordinated notes at par. The noncallable notes mature in 2001, Moody's Investors Service rates the notes Ba3, while Standard & Poor's Corp. rates them B-plus. Goldman, Sachs & Co. lead managed the offering, which was increased from $200 million.
The high-yield market was flat to up 1/8 point in secondary trading yesterday. The high-grade market saw very light trading and was down about 1/4 point to 3/8 point in the 10-year segment. It was off about 5/8 point in the long end, traders said.
As for yesterday's new highgrade corporate and agency issues, Procter & Gamble Co. issued $200 million of 8% notes at par. The noncallable notes due 2003 were priced to yield 95 basis points over 10-year Treasuries. Moody's rates the notes Aa2, while Standard & Poor's rates them AA. Goldman Sachs was the sole manager on the offering.
The Federal National Mortgage Association issued $200 million of 7.40% medium-term notes due 1998. Noncallable for one year, the notes were priced initially at 99 30/32, to yield 7.41% or 34 basis points over seven-year Treasuries. Goldman Sachs was the sole manager.
First Chicago Corp. issued $100 million of 9.250% subordinated notes due 2001. The noncallable notes were priced at 99.72, to yield 9.293% or 188 basis points over comparable Treasuries. Moody's rates the notes Baal, while Standard & Poor's rates them A-minus. Salomon Brothers Inc. lead managed the issue.
GTE Southwest issued $100 million of 8.5% first mortgage bonds due 2031. The noncallable bonds were priced at 99.433, to yield 8.55% or 65 basis points over comparable Treasuries. Moody's rates the offering A1, while Standard & Poor's rates it AA-minus. Lehman was lead manager on the offering.
The Federal Home Loan Mortgage Corp. issued $100 million of 6.830% notes at par. Noncallable for a year, the notes due in 1996 were priced to yield 15 basis points over comparable Treasuries. Morgan Stanley lead managed the issue.
Boatmen's Bancshares Inc. issued $50 million of 8.625% subordinated notes due 2003. The noncallable notes were priced at 99.55, to yield 9.686% or 127 basis points over 10-year Treasuries. Moody's rates the notes A3, while Standard & Poor's rates them A-minus.