Tw Bonds With $950 Million

Time Warner Inc. raised $950 million in a two-part corporate debt issue last week, and Clear Channel Communications Inc. was expected to follow this week with a $500 million bond sale.

"A lot of media companies are churning their balance sheet," said analyst Bishop Cheen of First Union Capital Corp. in Charlotte, N.C. "They are taking down older, more expensive debt and lowering leverage of their bank debt."

Time Warner raised $500 million Friday by selling 20-year securities yielding 7.25%, following Thursday's sale of $450 million of 27-year bonds yielding 7.57%. Friday's sale was one of the day's largest domestic corporate bond offerings.

Analysts say the corporate bond market is being helped by the strong economy, restrained inflation and the lowest borrowing rates in 19 months. "Rates are low and demand is high and funds are incredibly flush with cash," Cheen said. "This is a good time for companies to refinance debt."

Investor appetites are particularly strong for noninvestment-grade companies, which are higher-yielding and seen as riskier. Time Warner's debt is just below coveted investment grade.

"We took advantage of the attractive interest-rate environment," Time Warner spokesman Edward Adler said. He added that at least a portion of the proceeds will be used to pay off higher-costing debt.

Merrill Lynch & Co. was manager of the 20-year debt issue. Morgan Stanley, Dean Witter was underwriter of the 27-year debenture sale.

In completing the bond sale last week, Time Warner raised nearly $1 billion and locked in favorable borrowing rates that can be used to possibly call back outstanding debt securities and slash bank debt. The New York-based media giant has about $17 billion in outstanding debt.

The 1990 deal that created Time Warner and last year's acquisition of Turner Broadcasting System Inc. has increased outstanding debt levels and weighed on the stock. However, a recent focus on cost cutting and profits has renewed investor interest, sending Time Warner's stock up nearly 48% this year.

The company has indicated that it intends to slash expenses by 4% and keep capital spending unchanged at about $2.2 billion annually during the next few years. In New York Stock Exchange trading Friday, Time Warner rose 1Ú2, or nearly 1%, to 557Ú16.

Meantime, Texas broadcaster Clear Channel was expected to sell $500 million worth of 30-year bonds sometime this week, according to Bloomberg News. In addition, Toronto live theater company Livent Inc. was reportedly nearing the sale of $100 million of seven-year notes in a private deal.

Clear Channel, operator of 176 radio stations and 18 TV stations, has debt rated by Standard & Poor's Ratings Agency at the high end of so-called junk bond status.