Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  Walt Disney Co    DIS

SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

Disney Sells $800 Million of Floating-Rate Debt

share with twitter share with LinkedIn share with facebook
share via e-mail
0
02/12/2013 | 11:26pm CET
   By Patrick McGee 
 

Walt Disney Co. (>> The Walt Disney Company) borrowed $800 million Tuesday, issuing its first batch of so-called floating-rate notes since 2007.

Floating-rate notes are a type of debt that pay investors an interest rate that resets every quarter, and Disney was among a small club of companies able to sell theirs at rates below the London interbank offered rate, or Libor, since the financial crisis.

Floating-rate notes enable companies to sell bonds tied to a different benchmark than those linked to U.S. Treasurys, offering diversity for buyers wary of rising interest rates.

"It's a way to hedge against interest-rate risk while continuing to be in corporates," said Sean Simko, portfolio manager at SEI Fixed Income Management.

Libor is an industry standard based on the interest rate banks charge to lend to one another. Selling bonds below Libor indicates investors are more comfortable lending to some companies than banks are lending to each other.

Disney's notes were priced at 0.01 percentage point less than Libor, which is currently 0.30%. A year ago it was 0.52%.

Nonfinancial companies had already sold $7.9 billion of floating-rate notes this year through Monday, marking a year-to-date record in Dealogic data going back to 1995. In the same period last year, $3.5 billion was priced.

The uptick in issuance is likely to continue this year as front-end accounts--investors with short time horizons--become more comfortable extending the maturities of their investments, according to Anne Daley, senior syndicate banker at Barclays.

"It definitely shows confidence returning," she said. "After the credit crisis, front-end accounts started to pull in the reins on how far out they would buy bonds. The market for [longer-dated issues such as] two- and three-year floating-rate notes had dried up."

James Barnes, senior fixed-income manager at National Penn Investors Trust Co., said great demand for floating-rate notes is limiting the extra yield these notes pay over Libor but, even so, they are valuable for investors who want protection against climbing interest rates.

"Returns may be miniscule, but you're diversifying your portfolio," he said.

The Disney deal is the second floating-rate deal to price below the Libor rate this month. Last week, IBM Corp. (>> International Business Machines Corp.) sold $1 billion of notes at 0.02 percentage point less than Libor. Last year, Procter & Gamble Co. (>> The Procter & Gamble Company) and Coca-Cola Co. (>> The Coca-Cola Company) each priced notes below Libor. Before the financial crisis, this wasn't so rare, Ms. Daley said.

Mr. Barnes hasn't been active in the area because the market is small and sometimes difficult to trade in, he said. He plans on buying floating-rate Treasury bonds, which are widely expected to be offered within the next year.

Other investors don't see the value just yet.

"I don't think short-term rates are set to rise materially for the balance of the year, so owning a floating-rate is like having insurance that you might not really need for a while," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management. Mr. Jacobsen said he would prefer junk-rated bonds, which are less sensitive to rising interest rates than higher-quality fixed-rate bonds.

"I wouldn't be scraping the bottom of the junk barrel for yield, but the stuff closer to the top can give you a good yield for the risk you take," he said. Some of Wells's funds do own floating-rate notes, "but it's very selective.

Disney, which last year acquired "Star Wars" maker Lucasfilm Ltd. for $4 billion, said the deal would raise cash for general corporate purposes. Fitch Ratings said it expects the company to replace short-term debts called commercial paper, which totaled $3 billion at year-end.

Write to Patrick McGee at patrick.mcgee@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on WALT DISNEY CO
03/24 BAYSTREET.CA’S TOP STORIES OF : Googl, shld, dis
03/24DJWALT DISNEY : Disney Gives CEO More Time On the Job -- WSJ
03/23DJWALT DISNEY : Disney Extends CEO Robert Iger's Tenure to 2019 -- 4th Update
03/23DJWALT DISNEY : Disney Extends CEO Robert Iger's Tenure to 2019 -- 3rd Update
03/23 WALT DISNEY : Disney CEO Bob Iger gets contact extension to July 2019
03/23DJWALT DISNEY : Disney Extends CEO Robert Iger's Tenure to 2019 -- 2nd Update
03/23DJWALT DISNEY : Disney Extends CEO Robert Iger's Tenure to 2019 -- Update
03/23DJROBERT IGER : Disney Extends CEO Iger's Tenure to 2019
03/23 WALT DISNEY CO/ : Change in Directors or Principal Officers (form 8-K)
03/23 THE WALT DISNEY COMPANY : Board of Directors Extends Robert A. Iger’s Cont..
More news
Sector news : Broadcasting - NEC
03/24DJOfcom Proposes Automatic Compensation for UK Telecoms Customers
03/23 U.S. Senate votes to overturn Obama broadband privacy rules
03/23 U.S. Senate votes to overturn Obama broadband privacy rules
03/16DJTWENTY FIRST CENTURY FOX : 21st Century Fox's Bid for Sky Referred to Regulators
03/15 Turner, Fox, Viacom to offer advertisers way to laser focus on audience
More sector news : Broadcasting - NEC
News from SeekingAlpha
03/24 TWENTY-FIRST CENTURY FOX : Scenario Analysis Of Earnings
03/23 ETF MONKEY FOCUS : Consumer Staples ETFs
03/23 Sectors To Overweight In 2017 + 3 Favorite Picks
03/23 Pandora's First Mover Advantage Fades Away
03/23 Disney CEO Iger extends contract until July 2019
Advertisement
Financials ($)
Sales 2017 56 895 M
EBIT 2017 15 107 M
Net income 2017 9 393 M
Debt 2017 17 136 M
Yield 2017 1,38%
P/E ratio 2017 18,87
P/E ratio 2018 16,62
EV / Sales 2017 3,42x
EV / Sales 2018 3,22x
Capitalization 177 479 M
More Financials
Chart WALT DISNEY CO
Duration : Period :
Walt Disney Co Technical Analysis Chart | DIS | US2546871060 | 4-Traders
Full-screen chart
Technical analysis trends WALT DISNEY CO
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 30
Average target price 117 $
Spread / Average Target 4,2%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Robert A. Iger Chairman & Chief Executive Officer
Christine M. McCarthy Chief Financial Officer & Senior Executive VP
John S. Chen Independent Director
Robert W. Matschullat Independent Director
Aylwin B. Lewis Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
WALT DISNEY CO7.60%177 479
COMCAST CORPORATION8.27%176 855
CBS CORPORATION5.16%29 923
SKY PLC-0.86%21 071
LIBERTY MEDIA FORMULA ..2.23%20 830
LIBERTY SIRIUS XM GROU..11.04%20 830
More Results