Obnoxiously Large' Number Of Banks Sell AMC Networks Bond
23 Junho 2011 - 3:48PM
Dow Jones News
It would be simpler to name the banks that didn't help sell AMC
Networks Inc.'s $700 million senior notes than to list the 18 that
did.
The term sheet for the high-yield deal, which priced late
Wednesday, lists 12 joint lead managers: Bank of America Merrill
Lynch, J.P. Morgan, Barclays Capital, Citigroup, Credit Agricole,
Credit Suisse, Goldman Sachs, Morgan Stanley, Royal Bank of
Scotland, SunTrust Robinson Humphrey Inc., UBS and U.S.
Bancorp.
Right below, a list of six co-managers: BNP Paribas, Deutsche
Bank, Guggenheim Partners, Nomura Securities, Royal Bank of Canada
and Scotia Bank.
"It's an obnoxiously large list," said one banker involved in
the trade who declined to be named. He did note, though, that the
recent trend has been to have more bookrunners on deals so as to
maintain better relationships with issuers.
Obnoxious or not, it isn't a record, according to data provider
Dealogic.
For high-yield deals, the record goes to an issue from Wind
Acquisition Finance SA last November: 21 banks, including 15
bookrunners and six co-managers. But that issue was for $3.66
billion -- more than five times as big as AMC's deal -- and was
split between euros and dollars.
Based on Dealogic records, which go back to 1995, the biggest
deal dogpile was a $13.5 billion, five-part investment-grade
offering from Pfizer Inc. in March 2009. Twelve joint bookrunners
and 10 co-managers -- 22 banks in all -- were hired to push all of
that paper out the door.
That said, AMC's issue still stands out for its bank-to-deal
size ratio. Earlier this month, for example, Arch Coal managed to
sell a $2 billion two-part bond with the help of only five banks:
Morgan Stanley, PNC Financial Services, Bank of America Merrill
Lynch, Royal Bank of Scotland and Citigroup.
Having multiple bookrunners has become more common in the post
credit-crisis world where the number of deals and the size of each
is also smaller, industry participants said. With increased
volatility in the credit markets, they add, it helps to mitigate
risk by having more underwriters participate in a transaction.
"It's a function of choppy credit markets," said Sabur Moini,
portfolio manager of the Payden High Income Fund. "Underwriters
want to have more underwriting risk spread around. Even for AMC,
which is a strong credit, the point is that underwriters just don't
want to take any risk right now."
Adam Vengrow, head of credit sales and trading at Cantor
Fitzgerald in New York, echoed the thought. "It is so sensitive
right now that every deal you bring to market, you need to have the
right price, you have to have lots of people, you do whatever it
takes," he said. "The more people you have involved, the better
it'll do. It's more important that we can keep revenues keep coming
in and stay in the game."
Sometimes, it is important to get more dealers involved to get
support for a deal, Vengrow said. "If you are a co-manager in the
deal, then you have helped market it so it creates a better support
system for it. Some issues require heftier amount of work."
AMC Networks, a subsidiary of Cablevision Systems Corp.,
declined to comment.
The banks' fees in a transaction like the AMC deal were likely
not sizeable, but representatives of several banks that helped
market the bond said it isn't about the money.
They insist it is all about the relationship -- opening the door
for more business down the road.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227;
anusha.shrivastava@dowjones.com
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