Self-made event risk

11 April 2006 By Antony Currie Follow @AntonyMCurrie

They settled for a sweetened price on last week s $4.8bn bond deal. True, Viacom s growth and cash flows look healthy. But it s also buying back stock and hunting for deals. Given chairman Sumner Redstone s record, bondholders should have pushed for more.

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Last week Viacom issued $4.8bn in bonds, its first bond deal since splitting of from CBS. It's the thirdlargest corporate bond deal in the US this year, following Cisco's $6.5bn deal and an offering of $5.8bn from Oracle.

The media company issued $1.5bn of fiveyear bonds, $1.5bn of 10year bonds, and $1.8bn of 30year bonds. The three tranches were priced to yield as much as 15 basis points more than comparable media debt.

Viacom is expected to use the proceeds to pay down bank debt that is falling due in the next year.

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