YankeeNets is "trying to raise" $250M by selling junk
bonds, or high yield bonds, to investors, according to a
WALL STREET JOURNAL report. Data-research firm CommScan
notes that this marks the first time a high yield bond deal
will "be done by a sports team." First Union Corp's First
Union Securities will underwrite the deal. The bonds were
rated "junk, or below investment grade," by Moody's
Investors Service and Standard & Poor's, meaning the bonds
"could carry an interest rate of about" 11%, given recent
conditions in the debt market (WALL ST JOURNAL, 2/24). The
AP reports that recent seven-year junk bonds "have paid out
at about" an 11.5% interest rate, which means YankeeNets
"will pay about" $203M in interest over the life of the
bonds. Moody's, which assigned the notes a B1 rating, said
that "more than half" of YankeeNets' revenues "comes from
variable sources, such as ticket sales, which is vulnerable
to a change in the teams' performance." S&P rated the notes
"B-minus" with the Nets "running in the red" (AP, 2/24).
