Numericable Group SA’s share price up, plans a record 8.5-billion-euro sale of junk bonds

The French telecoms and cable operator Numericable Group SA is planning to sell a record 8.5 billion euros (11.6 billion dollars) of junk bonds today. The step is provoked by the companys push to raise funds in order to finalise its purchase of the second-largest telecoms group in the country – the SFR of Vivendi SA. The figures are about 2 billion euros up than initially planned.

This would be the biggest sale of junk bonds, surpassing the 6.5 billion-dollar issue of the US mobile carrier Sprint Corp. in September last year. Numericable is the French subsidiary of Altice and only a few weeks ago managed to win the 17-billion-euro bidding war with Bouygues over the SFR telecoms division of Vivendi.

One of the fund managers working for Aberdeen Asset Management – Mr. Ben Pakenham commented on the decision of Numericable to sell such a quantity of junk bonds for the Wall Street Journal: “The [Numericable] deal is another milestone for the market. It shows how much the market is growing and the level of demand there is to take down these bumper deals.”

The junk bonds offer is planned to be divided in at least a couple of tranches. It is also possible to include a part denominated in U.S. dollars. JPMorgan, Goldman Sachs and Deutsche Bank are managing the sale.

As reported by the Financial Times, the Numericable Group SAs offer was also commented by the GMP Securities fixed-income strategy Adrian Miller: “The European high-yield market has been a key source of financing for European companies, which have taken advantage of the combination of low borrowing costs and ample demand for any higher-yielding paper. The deal will cater to a broad pool of investors, with different tranches and maybe even a dollar portion. It may attract a good pool of buyers from Asia and other parts of the globe.”

Numericable Group SA added 7.32% to trade at 33.63 euros per share by 12:14 GMT. According to the Financial Times, the 11 analysts offering 12-month price targets for Numericable Group SA have a median target of 30.00, with a high estimate of 35.00 and a low estimate of 24.25. The median estimate represents a -4.28% decrease from the last price of 31.34.