Brookfield Offers Medium-Term Notes - Analyst Blog
September 10 2012 - 12:36PM
Zacks
Last week, Brookfield Asset Management Inc. (BAM) announced the
issuance of C$425 million worth of medium-term unsecured notes.
These notes carry a yield of 4.546% and will mature in March
2023.
The sale of these notes would ensure enough liquidity for
redemption/repurchase of US$350 million worth 8.95% notes that
matured on June 2, 2012. Moreover, the funds will be used for
general and corporate purposes. These notes carry credit ratings of
‘Baa2’ (stable outlook) by Moody's Corp. (MCO); ‘A –‘(negative
outlook) by Standard & Poor’s; ‘BBB’ (stable outlook) by Fitch;
and ‘A low’ (stable outlook) by DBRS.
CIBC World Markets Inc – a wholesale banking arm of Canadian
Imperial Bank of Commerce (CM), Scotia Capital Inc. – corporate and
investment banking subsidiary of The Bank of Nova Scotia (BNS), and
TD Securities Inc – investment banking subsidiary of The
Toronto-Dominion Bank (TD) are acting as joint book-runners for the
offering.
Earlier this year, Brookfield had announced an offering of
medium-term unsecured notes worth C$425 million, carrying a yield
of 3.95% and maturing in April 2019. The net proceeds of the
offering are to be used for refinancing US$350 million of 7.13%
notes that have matured on June 15, 2012 and for general corporate
purposes as well.
Similar Initiatives by Other Institutions
Last month, CIT Group Inc. (CIT) announced the pricing of a
registered public offering worth nearly US$3 billion. This marks
the fourth bond offering by the company this year.
The public offering included US$1.75 billion of senior unsecured
notes due in 2017 and US$1.25 billion of senior unsecured notes
maturing in 2022. The former notes are priced at par and carry a
coupon rate of 4.25%, while the latter are also priced at par but
bear an interest rate of 5.00%.
The sale proceeds from the offering are planned to be used for
general corporate purposes. Additionally, refinancing of US$3.8
billion of 7% Series C Notes is expected by using the
proceeds.
Similarly, in April 2012, National Bank of Canada (NTIOF) had
declared issuance of C$1 billion worth of medium-term Series 7
notes, due on April 11, 2022. These notes carry a semi-annual yield
of 3.261% per annum until April 11, 2017 and thereafter a floating
rate equal to the rate on 3-month CDOR plus 1.38%. This will be
paid quarterly till maturity and the proceeds will be utilized for
general banking purposes.
Conclusion
The bond offerings by Brookfield reflect its funding profile
conversion. We anticipate these efforts to boost the company’s
future growth and increase investors’ confidence. However, a slow
economic recovery and stringent regulatory landscape remain the
major causes of concern.
Brookfield currently retains a Zacks #5 Rank, which translates into
a short-term Strong Sell rating.
Last week, Brookfield Asset Management Inc.
(BAM) announced the issuance of C$425 million worth of medium-term
unsecured notes. These notes carry a yield of 4.546% and will
mature in March 2023.
The sale of these notes would ensure enough liquidity for
redemption/repurchase of US$350 million worth 8.95% notes that
matured on June 2, 2012. Moreover, the funds will be used for
general and corporate purposes. These notes carry credit ratings of
‘Baa2’ (stable outlook) by Moody's Corp. (MCO);
‘A-‘ (negative outlook) by Standard & Poor’s; ‘BBB’ (stable
outlook) by Fitch; and ‘A low’ (stable outlook) by DBRS.
CIBC World Markets Inc – a wholesale banking arm of
Canadian Imperial Bank of Commerce (CM), Scotia
Capital Inc. – corporate and investment banking subsidiary of
The Bank of Nova Scotia (BNS), and TD Securities
Inc – investment banking subsidiary of The Toronto-Dominion
Bank (TD) are acting as joint book-runners for the
offering.
Earlier this year, Brookfield had announced an offering of
medium-term unsecured notes worth C$425 million, carrying a yield
of 3.95% and maturing in April 2019. The net proceeds of the
offering are to be used for refinancing US$350 million of 7.13%
notes that have matured on June 15, 2012 and for general corporate
purposes as well.
Similar Initiatives by Other
Institutions
Last month, CIT Group Inc. (CIT) announced
the pricing of a registered public offering worth nearly US$3
billion. This marks the fourth bond offering by the company this
year.
The public offering included US$1.75 billion of senior
unsecured notes due in 2017 and US$1.25 billion of senior unsecured
notes maturing in 2022. The former notes are priced at par and
carry a coupon rate of 4.25%, while the latter are also priced at
par but bear an interest rate of 5.00%.
The sale proceeds from the offering are planned to be used for
general corporate purposes. Additionally, refinancing of US$3.8
billion of 7% Series C Notes is expected by using the
proceeds.
Similarly, in April 2012, National Bank of
Canada (NTIOF) had declared issuance of C$1 billion worth
of medium-term Series 7 notes, due on April 11, 2022. These notes
carry a semi-annual yield of 3.261% per annum until April 11, 2017
and thereafter a floating rate equal to the rate on 3-month CDOR
plus 1.38%. This will be paid quarterly till maturity and the
proceeds will be utilized for general banking purposes.
Conclusion
The bond offerings by Brookfield reflect its funding profile
conversion. We anticipate these efforts to boost the company’s
future growth and increase investors’ confidence. However, a slow
economic recovery and stringent regulatory landscape remain the
major causes of concern.
Brookfield currently retains a Zacks #5 Rank, which translates
into a short-term Strong Sell rating.
BROOKFIELD ASST (BAM): Free Stock Analysis Report
BANK OF NOVA SC (BNS): Free Stock Analysis Report
CIT GROUP (CIT): Free Stock Analysis Report
CDN IMPL BK (CM): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
(NTIOF): ETF Research Reports
TORONTO DOM BNK (TD): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
National Bank of Canada (PK) (USOTC:NTIOF)
Historical Stock Chart
From Jun 2024 to Jul 2024
National Bank of Canada (PK) (USOTC:NTIOF)
Historical Stock Chart
From Jul 2023 to Jul 2024