Sirius Postpones Debut Deal

Sirius Satellite Radio, which recently inked shock jock Howard Stern to a $500 million contract, has postponed its debut high-yield offering due to market conditions, said David Frear, cfo. Company officials recently conducted roadshows as part of efforts to raise $250 million in 10-year, triple-C notes in a sale that was expected to have come to market by now. But a weakened risk appetite in recent weeks forced it to put the sale on hold.

"At the right price it's a financing we're still interested in doing, but at the wrong price it's just an opportunistic financing and we don't need the money," Frear said. He added Sirius is still in discussions with lead underwriter J.P. Morgan to gauge whether it will bring the deal in coming weeks.

One investor said the most recent price talk was 10 1/4 -10 1/2%, but the company was apparently unable to tempt sufficient buyers at that price in the current market. Frear declined to specify at what spread over Treasuries he had been hoping to do the deal. But the median triple-C coupon for new deals in the second half of March was around 100 basis points wider than it was for deals sold in the beginning of the month, according to Moody's Investors Service (BW, 4/4).

"One of the big West Coast accounts we were talking to said they weren't going to buy any par bond because it was going to trade down," Frear added, declining to name the potential buyer.

To be sure, Sirius is not the only high-yield borrower swimming upstream. New high-yield offerings such as those from US Oncology, Abitibi-Consolidated and DaVita Inc. have been completed but have traded down, signaling a turning tide in the market (BW, 3/28).

Stern is scheduled to move his morning show to Sirius once his contract with Infinity Broadcasting expires early next year.