Comcast Corporation (NASDAQ:CMCSA) is reportedly selling bonds after entering into a deal to acquire Time Warner Cable Inc (NYSE:TWC) for $45 billion in stock, according to a report from the Wall Street Journal based on information obtained from people familiar with the situation on Wednesday.
Not related to Time Warner Cable deal
According to the sources, Comcast Corporation (NASDAQ:CMCSA) is planning to sell around $1.5 billion worth of bonds, and the sale is not related to the recently announced decision to purchase Time Warner Cable Inc (NYSE:TWC).
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
The company has not yet released any official statement regarding its intention to sell bonds.
Details of Comcast’s bond sales
Comcast Corporation (NASDAQ:CMCSA) will be offering 10-year and 30-year bonds expected to yield around 110 and 125 basis points, according to the people familiar with the issue.
According to the report, the company intends to use the proceeds from the sale of bonds for general corporate purposes such as paying off a $900 million debt due in April and some commercial paper—short-term debt generally used by corporation to fund operations. The company could also use some of the proceeds to fund its announced $10 billion shares buyback.
According to MarketAxess, the 2023 bonds of Comcast Corporation (NASDAQ:CMCSA) with a yield of 0.71 percentage points prior to the Time Warner Cable deal traded higher to 0.80 percentage points after the announcement. The bonds of Time Warner Cable Inc (NYSE:TWC) also climbed, which eased the investor’s concerns that the prices of its bonds might decline and its rating will be downgraded if it decides to accept the acquisition proposal of Charter Communications Inc (NASDAQ:CHTR).
A majority of the bondholders of Comcast Corporation (NASDAQ:CMCSA) support its plan to acquire Time Warner Cable Inc (NYSE:TWC). They believe that the merger will boost the company’s competitiveness and profitability. Investors were happy with the agreement that Comcast will pay the deal in stock instead of cash.