Disney Bonds Attract Record $2.6 Billion

Walt Disney Co. sold a record $2.6 billion of investment-grade corporate bonds Friday in a huge offering to help finance its $19-billion acquisition of Capital Cities/ABC Inc.

Disney, which needs $10.6 billion to finance the purchase, is expected to borrow an additional $7 billion to $8 billion with new debt sales in coming months.

The amount of bonds to be sold Friday had been set at $1.5 billion, but was increased early in the day to $2 billion and again to $2.6 billion to meet strong demand from investors worldwide.

The previous record for an investment-grade corporate bond offering was International Business Machines Corp.’s sale of $1.25 billion of debt in June 1993, according to Securities Data Corp., a Newark, N.J.-based research firm.

The biggest noninvestment grade sale of corporate bonds was RJR Capital Holdings’ $4.1-billion sale of junk bonds issued to refinance existing debt, Securities Data said.

An investment grade rating means the issuer is more likely to make scheduled payments to buyers of the bonds.

“After we started premarketing the deal it became evident that we could go to $2 billion and then demand kept picking up from there,” said syndicate manager James Quigley at Merrill Lynch & Co., co-lead manager of the deal with CS First Boston Corp.

“It was a very successful deal and dominated the market Friday,” said another syndicate official. Investors were also willing to accept lower yields to get the bonds, he said.

Disney completed its cash and stock acquisition of Cap Cities last month, creating one of the world’s largest media companies.

Half of Friday’s offering consisted of 6.375% five-year bonds that were priced to yield about a third of a point above comparable Treasury bonds.

The rest were 10-year bonds with a coupon of 6.75%. They were priced to yield 6.77%, or nearly half a point over comparable Treasuries.

Meanwhile, shares of Disney stock rose 37.5 cents at $64.875 on the New York Stock Exchange.