AT&T has sold US$6bn of senior unsecured notes, with proceeds to be used to refinance upcoming debt obligations as well as for general corporate purposes. Fitch noted that about US$7.3bn of the US telco’s US$126.2bn debt pile is due in 2016.
AT&T (NYSE:T) has sold US$6bn of senior unsecured notes, with proceeds to be used to refinance upcoming debt obligations as well as for general corporate purposes.
The four-tranche offering consists of US$1.25bn of 2.8% notes due 2021, US$1.5bn of 3.6% notes due 2023, US$1.75bn of 4.125% notes due 2026, and US$1.5bn of 5.65% notes due 2047, the second largest US wireless carrier said in an SEC filing.
Dallas-based AT&T’s leverage increased considerably in 2015 following its US$47bn purchase of DTH operator DirecTV and the US$18.bn it spent on spectrum in the AWS-3 auction. Its total outstanding debt amounted to US$126.2bn as of 31 December 2015. Fitch said it believes the telco’s upcoming debt maturities are manageable, noting that about US$7.3bn is due this year.
The 2021 notes priced at 99.823%, the 2023 notes at 99.925%, the 2026 notes at 99.934% and the 2047 notes at 99.766%.
They will be issued under an indenture dated 15 May 2013 between AT&T and The Bank of New York Mellon as trustee.
The joint bookrunners for the offering were Barclays, BNP Paribas, JP Morgan, Wells Fargo, BBVA, Santander and TD Securities.
Senior co-managers were Banca IMI, Commerz Markets, Loop Capital Markets, SG Americas Securities and US Bancorp Investments.
Fitch has rated the notes A- (stable), Moody’s Baa1 (negative) and Standard & Poor’s BBB+ (negative).
Fitch said its rating reflected AT&T’s diversified revenue mix, size and economies of scale, solid free cash follow following the DirecTV acquisition and its expectation that the telco will benefit from continued growth in wireless operating cash flow.
The agency noted that AT&T intends to reduce its net leverage from about 2.3x to 1.8x over the three years following the DirecTV deal closure, and dedicate free cash flow after dividends and any asset sale proceeds to reducing debt.
Moody’s, on the other hand, expects AT&T’s leverage to remain near or slightly above the 3.0x mark, noting that it will need extra capital to support ongoing investments and finance its growing working capital needs.
“Merger synergies related to the DirecTV acquisition will relieve some EBITDA pressure, but ongoing weakness in wireless revenues or a large asset purchase could place additional pressure on AT&T’s ratings,” the agency said.
Last December, AT&T CEO Randall Stephenson (pictured) said the company was open to selling the Latin American pay-TV assets it acquired through DirecTV. The assets, which comprise satellite and cable businesses in Brazil, Colombia, Venezuela and Argentina, could reportedly be worth US$10bn.
The telco has indicated it will participate in the upcoming broadcast incentive auction, aiming to acquire 10×10 MHz contiguous licences nationwide, but has not shared its target spend.
Late last month, it was reported that AT&T is preparing for a major media purchase, with Time Warner touted as the likely target.
