AT&T has priced US$2bn of 30-year global notes at 99.64 as it looks to refinance maturing debt.
The unsecured paper pays interest at 4.8% annually and is being sold by JP Morgan, Morgan Stanley and RBC Capital Markets, according to an SEC filing.
AT&T…
AT&T has priced US$2bn of 30-year global notes at 99.64 as it looks to refinance maturing debt.
The unsecured paper pays interest at 4.8% annually and is being sold by JP Morgan, Morgan Stanley and RBC Capital Markets, according to an SEC filing.
AT&T plans to use the proceeds for general corporate purposes, including the repayment of maturing debt.
The Dallas, Texas-based telco has total debt of US$79.9bn, US$4bn of which is maturing this year and a further US$8.2bn next year. Ratings agency Fitch said that these repayments were manageable given AT&T’s projected free cash flow.
Fitch assigned the offering an A rating and said that AT&T remains on “rating watch negative” in light of its US$48.5bn merger with DirecTV. In a report explaining its rationale the agency said that this was because of the increase in AT&T’s leverage.
However, it said in the long-run it expected the DirecTV acquisition to improve AT&T’s financial flexibility due to the DTH provider’s strong free cash flows and the significant equity component in the transaction financing.
AT&T is paying US$28.50 in cash and US$66.50 in AT&T stock for each of the pay-TV giant’s shares. When the merger was announced it said it would finance the cash portion of the deal by utilising cash on hand, performing opportunistic debt market transactions, selling non-core assets, and through committed financing facilities.
The deal significantly boosts AT&T’s pay-TV subscriber base in the US, taking it from a base of five million to 26 million, and gives it a business in Latin America with the potential to grow.
