Bloomberg News

Disney Sells Debt After Quarterly Profit Beats Analyst Estimates

November 30, 2011

Nov. 29 (Bloomberg) -- Walt Disney Co., the world’s biggest theme-park operator, sold bonds for the third time this year after reporting fourth-quarter profit that beat analysts’ estimates on growth in cable television and at U.S. resorts.

The owner of ESPN issued $1 billion 0.875 percent, three- year notes and $600 million of 4.125 percent, 30-year bonds, according to data compiled by Bloomberg. A Deere & Co. unit joined the Burbank, California-based entertainment company in marketing a benchmark-sized offering today.

Companies are racing to sell debt as borrowing costs hover within 60 basis points of a record low, propelling bond sales this month to $98.6 billion as of yesterday, the highest since May. Yields on investment-grade debt of 4.01 percent yesterday compare with the record low of 3.45 percent reached in August, and are down from 4.15 percent on Oct. 11, according to Bank of America Merrill Lynch index data.

Disney said on Nov. 10 that profit in the fourth quarter totaled 59 cents a share, exceeding analysts’ projections of 55 cents, the average of 26 estimates compiled by Bloomberg. Higher fees from pay-TV operators, advertising gains and improved results at resorts drove revenue and profit higher.

Rising Earnings

A rise in earnings before interest, taxes, depreciation and amortization is improving Disney’s leverage without the company working toward any debt reduction, Dave Novosel, an analyst at Gimme Credit LLC wrote in a Nov. 14 note.

“Revenue and margins are increasing nicely, aided by an improving economy and a much better advertising environment,” he wrote.

Disney sold $1.85 billion of bonds in August and $500 million of notes in May, Bloomberg data show. The company’s 30- year bonds priced to yield 125 basis points more than similar- maturity Treasuries, and compare with $350 million of 4.375 percent bonds issued in August at an 87.5 basis-point spread.

John Deere Capital Corp. issued $500 million of 2 percent debt due in January 2017 and $600 million of 1.25 percent debt due in 2014, Bloomberg data show.

Borrowers issued $159 billion of corporate bonds in May, Bloomberg data show.

--Editor: Mitchell Martin, John Parry

To contact the reporter on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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