Rogers assessing investor demand for hybrid securities
BNN Bloomberg
Rogers is gauging investor appetite for a hybrid security, a funding strategy that blends characteristics of debt and equity and may help the company preserve its investment-grade rating after a recent spending binge.
Rogers Communications Inc. is gauging investor appetite for a hybrid security, a funding strategy that blends characteristics of debt and equity and may help the company preserve its investment-grade rating after a recent spending binge.
The Toronto-based telecommunications services provider on Tuesday held telephone calls with bond investors to assess their interest in such a sale, according to three people with direct knowledge of the matter, who asked not to be identified discussing private conversations. The proposed security would have a 60-year maturity, a call option after five years, and preliminarily is being offered at a yield between 5 per cent and 5.25 per cent, the people said.
A representative for Rogers declined to comment, and the telecom company hasn’t announced any debt transaction.
Rogers spent about $3.3 billion in the latest government auction of wireless airwaves, more than triple the base-case forecast of S&P Global Ratings. The ratings company has had Rogers on review for a potential downgrade since March, when Rogers unveiled a planned $26 billion, debt-funded purchase of Shaw Communications Inc.
In a note on Sept. 22, S&P analyst Aniki Saha-Yannopoulos said that Rogers’ “management is exploring various funding options, which could include hybrids, and sale of non-core asset sales to fund the investment” in Shaw, adding that a hybrid offering would help Rogers keep its debt leverage ratios below a certain threshold. Rogers has a rating of BBB+, S&P’s third-lowest investment grade.
Companies issue hybrid bonds to beef up their balance sheet as rating companies treat them partly as equity. Generally speaking, investors in hybrids take on the second-most risk after stockholders, because the securities are subordinate to more senior layers of debt in priority for payment.
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