By Josie Cox
LONDON, March 28 (IFR) - Ziggo's outstanding bonds fell onThursday, weighed by news that cable operator Liberty Global wasbuying a 12.65% stake, prompting speculation it might eventuallymake a full bid, increasing Ziggo's leverage.
Ziggo, the Netherlands' largest cable operator was last inthe bond market earlier this month with its debut investmentgrade secured bond, which is rated Baa3/BBB-.
Those 3.625% March 2020 notes dropped one point to a cashprice of around 100.40, according to Tradeweb, while Ziggo'shigh-yield 8% May 2018 issue was also a point lower at 107.50.
Liberty Global, which owns multiple cable companiesincluding UPC and Telenet, said on Thursday it had bought theshares in Ziggo for EUR25 apiece from Barclays CapitalSecurities, prompting rumour Liberty might bid for the wholecompany.
Liberty said in a statement that the acquisition, in asector in which it is already involved, was attractive given thestock's dividend yield of about 7.4%, based on the expectationthat Ziggo would pay EUR370m to investors in 2013.
The share purchase follows a EUR1bn 20% stake sale of thecompany by private equity firms Cinven and Warburg Pincusearlier this week.
That sale left underwriter Barclays holding more thanEUR700m in Ziggo shares, and caused many observers to label it afailure.
Liberty is already involved in a multi-billion poundacquisition of British cable group Virgin Media - one of thebiggest M&A transactions in Europe since the 2007 financialcrisis.
On the news of that takeover, Virgin Media's investmentgrade 2021 bonds - which had been trading at a cash price of 113before the acquisition was leaked to the media - dropped toabout 105, on fears that Liberty Global would sharply increaseleverage at Virgin Media.
When the deal was confirmed a day later, the bonds droppedfurther to 101, even though senior secured leverage was raisedonly modestly to 3.4 times from 3.1 times on a secured basis.