Obnoxiously Large' Number Of Banks Sell AMC Networks Bond

It would be simpler to name the banks that didn't help sell AMC Networks Inc.'s $700 million senior notes than to list the 18 that did.

The term sheet for the high-yield deal, which priced late Wednesday, lists 12 joint lead managers: Bank of America Merrill Lynch, J.P. Morgan, Barclays Capital, Citigroup, Credit Agricole, Credit Suisse, Goldman Sachs, Morgan Stanley, Royal Bank of Scotland, SunTrust Robinson Humphrey Inc., UBS and U.S. Bancorp.

Right below, a list of six co-managers: BNP Paribas, Deutsche Bank, Guggenheim Partners, Nomura Securities, Royal Bank of Canada and Scotia Bank.

"It's an obnoxiously large list," said one banker involved in the trade who declined to be named. He did note, though, that the recent trend has been to have more bookrunners on deals so as to maintain better relationships with issuers.

Obnoxious or not, it isn't a record, according to data provider Dealogic.

For high-yield deals, the record goes to an issue from Wind Acquisition Finance SA last November: 21 banks, including 15 bookrunners and six co-managers. But that issue was for $3.66 billion -- more than five times as big as AMC's deal -- and was split between euros and dollars.

Based on Dealogic records, which go back to 1995, the biggest deal dogpile was a $13.5 billion, five-part investment-grade offering from Pfizer Inc. in March 2009. Twelve joint bookrunners and 10 co-managers -- 22 banks in all -- were hired to push all of that paper out the door.

That said, AMC's issue still stands out for its bank-to-deal size ratio. Earlier this month, for example, Arch Coal managed to sell a $2 billion two-part bond with the help of only five banks: Morgan Stanley, PNC Financial Services, Bank of America Merrill Lynch, Royal Bank of Scotland and Citigroup.

Having multiple bookrunners has become more common in the post credit-crisis world where the number of deals and the size of each is also smaller, industry participants said. With increased volatility in the credit markets, they add, it helps to mitigate risk by having more underwriters participate in a transaction.

"It's a function of choppy credit markets," said Sabur Moini, portfolio manager of the Payden High Income Fund. "Underwriters want to have more underwriting risk spread around. Even for AMC, which is a strong credit, the point is that underwriters just don't want to take any risk right now."

Adam Vengrow, head of credit sales and trading at Cantor Fitzgerald in New York, echoed the thought. "It is so sensitive right now that every deal you bring to market, you need to have the right price, you have to have lots of people, you do whatever it takes," he said. "The more people you have involved, the better it'll do. It's more important that we can keep revenues keep coming in and stay in the game."

Sometimes, it is important to get more dealers involved to get support for a deal, Vengrow said. "If you are a co-manager in the deal, then you have helped market it so it creates a better support system for it. Some issues require heftier amount of work."

AMC Networks, a subsidiary of Cablevision Systems Corp., declined to comment.

The banks' fees in a transaction like the AMC deal were likely not sizeable, but representatives of several banks that helped market the bond said it isn't about the money.

They insist it is all about the relationship -- opening the door for more business down the road.

-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; [e-mail]