NBC Universal Benchmark Deal Offers Cheap Comcast Exposure

NBC Universal Inc. is priming a benchmark-sized debt offering for sale Tuesday, offering five-, 10- and 30-year senior unsecured fixed-rate notes.

The size of Tuesday's debt sale is not set, but it is part of NBC's efforts to borrow a total of $9.1 billion as the network leaves General Electric Co. (GE) and is acquired by Comcast Corp. (CMCSA).

Some of the proceeds from Tuesday's deal will be used to pay down NBC's existing two-year term loan with part also applied toward the $5.8 billion that GE paid to Vivendi SA (VIVDY) for its 20% stake in NBC Universal.

The proposed notes will also reduce NBCU's commitments under its bridge loan.

Preliminary price guidance for the five-year piece is in the 130 basis points over Treasurys area; 150 basis points for the 10-year piece and about 185 basis points over Treasurys for the 30-year tranche. Those levels offer investors between 20-25 basis points in concession, according to one investor looking at the deal who said he would be buying it since it would give him "cheap CMSCA exposure."

Final size of the offering has yet to be determined, but volume will likely be attributable to investor demand.

The deal will include a change of control option--a built-in insurance policy that's triggered when a company changes control for any reason thereby altering its value. Investors are keen on this kind of covenant in sectors that are prone to merger and acquisition activity. The change of control option will be triggered if the Comcast/NBC merger has not been closed buy June 10, 2011.

The Federal Communications Commission had set May 3 as the deadline for comment on Comcast's bid to acquire 51% of NBC, but pushed that deadline back last week as U.S. regulators requested more information on the mega merger.

The offering has been rated Baa2 by Moody's Investors Service and BBB+ by Standard & Poor's and will be sold via active bookrunners Goldman Sachs (GS), JP Morgan (JPM) and Morgan Stanley (MS). Bank of America Merrill Lynch (BAC) and Citigroup Inc. (C) are passive bookrunners for the offering.

Pricing is expected this session in the private placement Rule 144a market.

-By Kellie Geressy-Nilsen, Dow Jones Newswires; 212-416-2225; kellie.geressy@dowjones.com

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