US telecoms operator CenturyLink is to issue US$1.4bn of 10-year unsecured senior notes and US$650m of 30-year unsecured senior notes in order to fund a tender offer for existing debt.
CenturyLink said that the 10-year notes carry a coupon of 5.8%,…
US telecoms operator CenturyLink is to issue US$1.4bn of 10-year unsecured senior notes and US$650m of 30-year unsecured senior notes in order to fund a tender offer for existing debt.
CenturyLink said that the 10-year notes carry a coupon of 5.8%, priced at 99.842 and have an effective yield to maturity of 5.821%.
The 30-year notes carry a coupon of 7.65%, priced at 99.905 and have an effective yield to maturity of 7.658%.
CenturyLink said that it plans to use the proceeds, along with available cash and borrowings under its existing revolver, to pay for a tender offer by a CenturyLink subsidiary, Embarq Corporation, for existing debt.
The joint bookrunning managers for the bond offering are Barclays Capital, JP Morgan, Morgan Stanley and RBC Capital Markets, part of the Royal Bank of Canada (RBC).
In the statement published yesterday, CenturyLink said that it had increased the cap on the total purchase price on the tender offer to US$2.05bn, up from the US$1.25bn that it had announced earlier in the day.
The tender offer by Embarq is for its 6.738% notes due 2013 and its 7.082% notes due 2016. The offer expires at midnight on 30 March.
The maximum tender amount for the 7.082% notes was also raised yesterday, up to US$1.3bn from US$1bn previously.
The principal amount outstanding of the 7.082% notes is US$2bn, while the amount outstanding for the 6.738% notes is US$528,256,000.
CenturyLink said yesterday that it is seeking to “extend the average maturity and reduce the average weighted interest rate of its consolidated debt” through the combination of the tender offer and the bond offering.
The lead deal managers for the tender offer are Barclays Capital and JP Morgan.
According to data from Dealogic, CenturyLink’s US$2.05bn financing was part of a record-breaking Monday for the US bond markets with US$24.7bn aggregate of notes being issued from at least 18 borrowers. One banker explained that a surfeit of institutional investor liquidity has driven down yields in both the investment grade and high yield bond markets and that companies are seeking to take advantage of the demand to lock-in low rates and extend maturities.
