Bloomberg News

NEW YORK — AOL Time Warner Inc., the biggest media and Internet company, has tapped J.P. Morgan Chase & Co. of New York to be lead arranger of a $5 billion, one-year credit line, according to bankers familiar with the matter.

The New York-based media company was created Jan. 11 when America Online completed its purchase of Time Warner. It said it will use the credit primarily as a backup in case it cannot issue commercial paper to fund day-to-day operations, the bankers said Monday. Bank of America Corp. in Charlotte, N.C., is a joint arranger.

Tricia Primrose, a spokeswoman for AOL Time Warner, declined to comment on the financing.

The interest rate on the loan is 45 basis points more than the London interbank offered rate, or Libor, which includes a 9-basis-point fee on unused portions. The rate is 21 basis points less than the average for a similarly rated borrower, according to Banc of America Securities.

Standard & Poor’s gave AOL Time Warner a “BBB-plus’’ corporate credit rating the day after its merger closed. The rating is eight notches below “AAA,’’ the highest investment-grade rating. S&P affirmed its “A2’’ rating for Time Warner Entertainment’s commercial paper, and Moody’s Investors Service rates it “P2.’’

The credit line is likely to be less expensive than selling commercial paper. The average cost this year of issuing 30-day commercial paper for an “A2/P2’’-rated borrower is 52.6 basis points more than Libor, according to Federal Reserve data.

Time Warner had a $7.5 billion, five-year credit line arranged by Chase Securities Inc. in 1997 and a $1.5 billion commercial paper program through Time Warner Entertainment Co., according to Bloomberg data. America Online had no bank lines or commercial paper program, according to Bloomberg.

Morgan Chase has scheduled a bank meeting Wednesday in New York, the banking sources said.

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