HG bonds: Bell Canada shops new 30-year issue to take out 2022 notes

Bell Canada is in the market with a benchmark public offering of senior notes, via active bookrunners BofA Securities, BMO Capital Markets, Barclays, Citi and RBC Capital Markets, according to participants in the offering. Early whispers started in the areas of T+60 for 3-year notes due March 17, 2024, and the T+145 area for 30-year bonds due March 17, 2051.

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. Bell Canada operates as a subsidiary of BCE Inc.

The issues are subject to make-whole call provisions, and the 2051 bonds are subject to a par call from six months prior to maturity. Both issues carry change-of-control put provisions.

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.

The issuer in May 2019 completed a $600 million offering of 4.3% 30-year notes due July 29, 2049, at T+142. The notes changed hands earlier this week in the T+125 area, according to MarketAxess. The early whispers for today’s proposed 2051 bonds initially suggest a reoffer yield near 3.83%.