Shaw Communications' Big Bond Issue

Sep.30.09 | About: Shaw Communications (SJR)

Shaw Communications (NYSE:SJR) won rating agency endorsement Tuesday for its massive $1.25-billion bond issue.

Shaw rolled out a well-received financing on Monday that will see the cable company borrow for 10 years at 5.65 per cent. It was one of the largest corporate debt sales seen from a non-financial Canadian company.

The company will use much of this cash to retire two debt issues, both of which sport far higher interest rates. Shaw has $440 million (U.S.) of 8.25 per cent notes due in April, 2010 and $300 million of 7.20 per cent senior notes due 15 December, 2011.

Moody’s summed up these plans as a “positive development,” noting that Shaw is expected to continue to refinance its near term debt maturities.

“The transaction extends Shaw's maturity profile,” said Moody’s senior credit officer Bill Wolfe in a report. While Shaw now has a substantial portion of its debt coming due in 2019 - about 35 per cent of all borrowing - Mr. Wolfe said: "Shaw is likely to be a bigger and more diverse company by then, so what appears to be a lumpy maturity profile will likely look more rational over time."

TD Securities led the Shaw financing. The debt sale was first marketed as a $750 million (Canadian) offering, then super-sized to reflect strong investor demand.