Emmis Communications hit 100 and Young Broadcasting traded at 100.75 last week, a note of strength for two credits in a weakening sector. Dealers said the trades were at $5 million each. "Broadcasting is softer in general, but the asset value is keeping the paper from softening further for now," a trader observed.
Earlier in the year a $750 million bond deal had pushed up levels for Young Broadcasting to the mid-101 range (LMW, 2/25). Emmis announced a $200 million bond deal the following month, and levels promptly hit 100. Dealers said the bonds, which would be subordinate to the bank debt, made the paper more attractive. A trader said asset value is keeping recent levels from bottoming out. "Mainly the networks are considered valuable assets and in a meltdown," a dealer said. "The banks could force an asset sale and would be covered 100 cents on the dollar, at least at current valuations. The bonds are much deeper in the capital structure, and getting out whole is not as clear."
Emmis' credit breaks down into a $400 million revolver, a $600 million term loan "A," and a $400 million term loan "B." Young Broadcasting has an $800 million credit facility that breaks down into three tranches and expires in 2006. Pricing is at LIBOR plus 31/4 %.