Fifth Street prices tight ahead of long weekend; Time Warner Cable notes tighten

By Cristal Cody and Aleesia Forni

Virginia Beach, Feb. 14 - Fifth Street Finance Corp. priced a new issue on Friday ahead of the three-day weekend due to the President's Day holiday.

Fifth Street Finance sold $250 million of 4.875% notes due 2019 at 99.451 to yield 5%, a source said.

Yield printed at the tight end of talk. Pricing was at Treasuries plus 348 basis points.

The deal was originally scheduled to price on Thursday but was pushed back due to the winter storm hitting the East Coast.

Roughly $13 billion of supply priced during the week, falling short of earlier estimates. Sources had predicted between $15 billion to $20 billion of new paper.

"We have a couple things lined up for next week," one market source said on Friday.

Around $15 billion to $20 billion of new issuance is expected to price during the holiday-shortened week ahead.

"It will be busier next week with more [companies] coming out of their blackouts," he added.

Bond activity slowed on Friday, and credit spreads headed out flat to slightly tighter, according to market sources.

The Markit CDX North American Investment Grade series 21 index firmed 1 bp to a spread of 64 bps.

In the secondary market, Time Warner Cable Inc.'s bonds tightened another 5 bps to 10 bps, a source said.

The company's bonds (Baa2/BBB/BBB) came in 110 bps to 130 bps on Thursday after the announcement that it struck a merger agreement with Comcast Corp. (A3/A-/A-), according to market sources.

Comcast plans to acquire Time Warner Cable in a $45.2 billion all-stock transaction valued at $158.82 per share.

The deal was struck as Stamford, Conn.-based Charter Communications Inc. (Ba3/BB-/) continued a hostile takeover effort by nominating 13 directors to Time Warner Cable's board on Tuesday. Time Warner Cable rejected Charter Communications' offer of $132.50 per share in January.

Fifth Street new issue

Fifth Street Finance priced a $250 million issue of 4.875% five-year notes (/BBB-/BBB-) on Friday at 99.451 to yield 5%, according to an informed source and a 497AD filed with the Securities and Exchange Commission.

Yield printed at the tight end of talk, which was set at 5% to 5¼%

The notes (/BBB-/BBB-) sold with a spread of Treasuries plus 348 bps.

Goldman Sachs & Co., Morgan Stanley & Co. LLC, Barclays and J.P. Morgan Securities LLC were the active bookrunners.

The passive bookrunners were Deutsche Bank Securities Inc., RBC Capital Markets LLC and UBS Securities LLC.

Proceeds will be used to repay outstanding debt under the company's credit facilities.

Fifth Street is a White Plains, N.Y.-based externally managed, closed-end, non-diversified management investment company.

Time Warner Cable firms

Time Warner Cable's 4.125% notes due 2021 firmed to 70 bps bid from 80 bps bid the previous day in secondary trading on Friday, a source said.

The bonds traded on Wednesday in the 215 bps area.

Time Warner Cable sold $700 million of the 4.125% notes due 2021 at 155 bps over Treasuries in 2010.

The broadband communications company is based in New York City.

Bank/brokerage CDS flat to lower

Investment-grade bank and brokerage CDS prices were unchanged to lower, according to a market source.

Bank of America Corp.'s CDS costs firmed 1 bp to 73 bps bid, 76 bps offered. Citigroup Inc.'s CDS costs were flat at 80 bps bid, 83 bps offered. JPMorgan Chase & Co.'s CDS costs ended unchanged at 63 bps bid, 66 bps offered. Wells Fargo & Co.'s CDS costs closed flat at 40 bps bid, 43 bps offered.

Merrill Lynch's CDS costs firmed 1 bp to 76 bps bid, 79 bps offered. Morgan Stanley's CDS costs were flat at 88 bps bid, 93 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended unchanged at 92 bps bid, 97 bps offered.

Paul Deckelman contributed to this review.

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