HG bonds: Bell Canada prices $1.1B of notes to extend maturities; terms

Bell Canada today completed a $1.1 billion public offering of senior notes, across $600 million of three-year notes due March 17, 2024, at T+45, and $500 million of 30-year bonds due March 17, 2051, at T+127.

Proceeds are earmarked to partially fund the redemption, in whole or in part, of the issuer's CDN$1.7 billion principal amount of 3.00% MTN debentures (Series M-40) due Oct. 3, 2022. Any net proceeds from the offerings not used for such purpose will be used for the repayment of short-term debt, according to regulatory filings. Bell Canada operates as a subsidiary of BCE Inc.

The BBB+/Baa1 ratings profile for the new offering reflects stable outlooks on both sides. Moody's, in a research note published in September 2020, said the rating benefits from the company's "stable national broadband business with healthy margins and a supportive regulatory regime." The agency said that ratings upside is constrained by the company's decision to maintain leverage at 3x and pay out a "high" dividend, which reduces financial flexibility as the company faces an ongoing need for network investments.

Despite the sharp rise in long-term bond yields over the last month, Bell Canada nevertheless netted lower absolute costs today relative to its last placement of long bonds. The issuer in May 2019 completed a $600 million offering of 4.3% 30-year notes due July 29, 2049, at T+142, which compares with a 3.65% coupon for today's bond pricing at T+127. The outstanding 2049 bonds changed hands earlier this week in the T+125 area, according to MarketAxess. Terms: