Pipelines run toward oil storage tanks stand at the Enbridge Inc. Cushing storage terminal in Cushing, Okla., in this file photo.Daniel Acker/Bloomberg
Enbridge Inc. is offering $1-billion of 60-year bonds on Thursday, following in the footsteps of fellow Canadian pipeline giant TransCanada Corp.
The Calgary-based pipeline operator is offering fixed-to-floating rate subordinated notes due September 2077 that could be automatically converted into preference shares in case of bankruptcy. The notes, redeemable after September 2027, will pay a coupon of around 5.5 percent, according to people familiar with the matter, who are not authorized to speak publicly and asked not to be identified.
Proceeds from the sale will be used to fund capital projects, reduce short-term debt, and other corporate purposes. The securities have similar maturity and call structure as the $1.5-billion of 4.65-per-cent bonds sold by a unit of TransCanada in May. Before that sale, the market for Canadian dollar corporate bonds hasn't seen an offering of that long a tenor since Enbridge sold $100-million of 100-year bonds in 2012.
Fitch assigned a BBB- rating to the offering, the agency said in a report Thursday. The ratings reflect the company's "beneficial size as well as the cash flow stability provided by its low risk businesses," while concerns include, among others, elevated leverage and robust capital spending levels.
The sale is led by BMO Capital Markets, RBC Capital Markets and TD Securities.