February 13, 2014 / 2:46 PM / 4 years ago

Time Warner Cable CDS screams tighter on Comcast deal

Feb 13 (IFR) - The cost of insuring Time Warner Cable’s debt against default fell sharply Thursday on news that Comcast Corp will buy the company for USD45.2bn.

TWC’s five-year credit default swaps (CDS) tightened 107bp to 74bp, while the company’s bonds also rallied.

One banker said TWC’s 4.5% 2042 bonds were trading at a G-spread of 155bp from around 275bp before the Comcast news broke late on Wednesday.

Time Warner Cable bonds have been trading more like a junk- rated company due to speculation that Charter Communications would buy the business instead and load it up with debt.

“Comcast is investment-grade, so this is good news for TWC bondholders,” said the banker.

The all-stock deal combines the two largest US cable operators. The friendly takeover comes as a surprise after months of public pursuit of Time Warner Cable by smaller rival Charter.

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