Mammoth Comcast Loan Raises Capacity Questions

  • 10 Mar 2002
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The $17 billion in loans for AT&T Comcast being shopped by J.P. Morgan and Citibank could test the depth of the market for huge deals for investment-grade borrowers. J.P. Morgan and Citi have just started shopping the deal to potential managing agents and five banks have already committed $10 billion. The company's strong relationships should carry the deal, bankers said. But other bankers noted they are watching with interest to see how the deal does in the wake of a somewhat difficult syndication for Weyerhaeuser Co.'s $4 billion commercial paper backstop.

"It will be interesting to see how this is going to come across after Weyerhaeuser found $4 billion tough," one banker said. "J.P. Morgan is looking for $450 million tickets and this is very steep." The bank meeting is set for after March 20, according to sources.

The bank meeting is tentatively set for March 21, according to KenMikalauskas, v.p. of finance at Comcast, who is upbeat on the prospects for the $17 billion in loans being arranged and syndicated by a variety of banks. "With the size of the loan it is a challenge. Big numbers are harder to come by, but it is likely to get done. Cable is a very predictable business and AT&T Comcast will be the biggest player," he rejoined. AT&T Broadband is being combined with Comcast in a $72 billion transaction.

J.P. Morgan, Bank of America, Merrill Lynch, Morgan Stanley and Citibank are said to be the banks that have committed $10.2 billion so far. Morgan, Merrill and J.P. Morgan are also the M&A advisers on the deal. The facilities comprise a new $12.5 billion loan and $3.4 billion from the existing $4.5 billion bank line. The lines will be used to fund $10-13 billion of AT&T inter-company debt. The new loan is split between a $7 billion 364-day bridge loan; a $2.5 billion, five-year revolver; and a $3 billion two-year term loan. For $450 million commitments, $300 million will go towards the term loan and five-year revolver, and $150 million will go to the bridge loan, where bond economics will apply. Syndication officials at the banks either declined comment or did not return calls.

Several bankers noted J.P. Morgan and Morgan Stanley were struggling with the Weyerhaeuser loan until the bond deal was upsized from $4 billion to $5.5 billion, and the loan reduced to $2.6 billion. "It demonstrates the strength of the bond market against availability in the bank market," said one banker. Michael Dorfsman, a J.P. Morgan spokesman said the Comcast loan is in the very early stages and he declined further comment. Commenting on Weyerhaeuser he said, "the bond was upsized because of strong interest particularly in the longer-dated tranches. The proceeds will be used to refinance bank borrowings." Dan Lawler, an AT&T spokesman declined comment. J.P. Morgan and B of A lead the current $4.5 billion Comcast line, which carries a LIBOR plus 3/4% spread.

  • 10 Mar 2002

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1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

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2 Rabobank 1,292.64 1 20.01%
4 BNP Paribas 598.25 2 9.26%
5 TD Securities Inc 241.54 1 3.74%