Moody’s rates the new bond issue by CBS


Moody’s Investors Service says the new issue of a half billion dollars in senior unsecured notes due 2020 by CBS Corporation will positively impact the company’s liquidity, since the proceeds will be used to retire some bonds coming due at earlier dates.

Here is what Moody’s had to say about the proposed securities sale:

“Moody’s Investors Service assigned a Baa3 rating to CBS Corporation’s (“CBS”-Baa3 senior unsecured, stable outlook) proposed senior unsecured notes of up to $500 million due 2020. The notes issued by CBS Corporation, the ultimate parent, are unsecured obligations and will rank equally with all other existing and future unsecured debt of the company. The covenant package is the same as CBS’s existing senior unsecured notes except that holders of the new notes (and the notes issued in 2009 – 8.2% notes due 2014, 8.875% notes due 2019) have a right to put the bonds at 101 should a change of control and a downgrade below investment-grade occur as a result of the change of control.

Proceeds from the bond offering will be used by the company to repay some of its existing debt. CBS simultaneously announced a tender offer to repurchase up to $500 million combined aggregate principal amount of $950 million 6.625% notes due 2011, $250 million 8.625% notes due 2012 and $591 million 5.625% notes due 2012. In Moody’s view the new bond offering and the tender offer positively impact CBS’s intermediate-term liquidity profile by pushing out some of the debt maturities to 2020. The transaction is essentially leverage-neutral and as a result will have no impact on the company’s rating. The rating outlook is stable.”

The joint book-running managers for the new senior notes are Deutsche Bank Securities, Morgan Stanley, RBS, BofA Merrill Lynch and UBS Investment Bank.

Click here for a report on the CBS tender offer.