Sky Selling Bonds to Pay for Merger

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Sky are selling their first pound bonds in over seven years in an effort to reduce investor fears over the amount of debt that the company is taking on with its expansion into Europe.

The freshly formed, and recently renamed Sky empire have a lot on their plate currently. With the deals finally closed on both Sky Deutschland and Sky Italia, the company formally known as BSkyB (now simply Sky) have had to deal with the ire of investor groups, who have been resolutely cool on the prospect of investing in the business, with some groups actually suggesting that investors sell up, rather than stick with the company.

So, it should come as little surprise that Sky are reportedly selling nine and fifteen year bonds in the UK, in the hope of reducing the debt the company have taken on during the course of the buyouts, which is thought to now be around £7.9 billion.

Corporate bonds in companies with the same investor rating as Sky (BBB) are said to have an average 3.6% yield, which might well prove tempting to those looking to invest their money somewhere safe in a banking market where your return on investment is verging on non-existent. The only question is, is Sky actually a safe place to invest your money?

On the face of it, yes. Sky are a huge company with a massive presence in the UK TV and broadband markets with a keen interest to enter in to other segments of the market like mobile and home phone deals, but there’s a problem. Competition within the UK TV sector is fierce, and growing tougher by the day as BT and Virgin strengthen their offerings and build customer bases. It’s part of the reason why analysts believe Sky wanted to expand in to Europe, but it also means that Sky could begin to neglect their UK customers and forfeit their UK profits in the process. That said, their latest moves in the UK market, like the launch of Now TV, have gone down extremely well and given Sky’s profits a considerable boost, so the business could see strong growth in that sector.

It’s as yet unclear how many bonds Sky hope to sell in their company, but it’s unlikely to be enough to rid themselves of the considerable debt they’ve taken on over the last couple of months. As always, we will stay with the story and keep you up to date.


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