Entertainment giants Time Warner and Tele-Communications Inc. flooded the public bond markets this week with billions of dollars worth of new debt to take advantage of the lowest interest rates in months.

Time Warner issued $ 1 billion in “plain vanilla” 20-year notes in its first straight public bond offering since its merger. The bonds will pay interest at 9 .125% to investors and the proceeds are earmarked to refinance higher-interest-rate debt currently due by the company, as well as to buy back a portion of its series C or D preferred shares.

Merrill Lynch was the lead manager of the issue, which, as of midday yesterday, was only half bought out by investors. However, the financing took place in a saturated market after a busy Wednesday, when many other corporations raised $ 4.7 billion in new debt, the second-largest single-day total in Wall Street history.

TCI took advantage of the downpour on Wednesday, with demand so strong for its paper that it doubled the size of its offering of 10-year notes and 30-year bonds to $ 1.05 billion, from a planned $ 400 million.

TCI raised its new debt at two interest rates: the 10-year portion at 8.25% and the 30-year portion at 9.25%.

It was the first bond offering completed by the company that held a full investment grade rating from both Moody’s and Standard & Poor’s. Up until last fall, the company was plagued by a split rating, with S&P upping its gradation of the company to BBB– last fall. That upgrade, making TCI the only investment-grade cable TV company, partly triggered additional demand for the company’s latest bond offering, said Peter Milhaupt, a director at First Boston, the lead manager of the issue.

“TCI’s full investment-grade status opened up a huge new universe of buyers, such as pension funds, insurance companies and investment advisers who couldn’t buy into a company with a split rating,” he said.

TCI said the proceeds would go to reduce its bank debt. Currently, the company has some $ 9.2 billion worth of debt outstanding, with about 42% of that amount tied to floating rates through outstanding loans with more than 60 banks.

“We’re looking to better structure our balance sheet and remove our reliance on banking financing,” said Steven Smith, director of investor relations at the company’s Denver-based headquarters.

Jessica Reif, an analyst with Oppenheimer & Co., called the TW offering “a positive move,” for the company under several scenarios. Currently, TW and its subsidiaries have some $ 11 billion outstanding in debt at interest rates ranging from 6% to more than 11%. If proceeds from its latest debt offering are used to buy back a portion of its preferred series D shares, Reif estimates a net interest savings of nearly $ 50 million, or 13 cents per share.

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