A lot of love for Rogers bonds

Ted Rogers delivered on a promise, and now the market is showing some love to Rogers Communications Inc.

The cable and wireless company successfully navigated volatile credit markets by landing a $1.75-billion (U.S.) investment-grade bond offering last week, an underwriting led by Citigroup Inc. and JPMorgan Chase & Co.

The key words here are "investment grade." This was the first outing from the company since its debt was upgraded from junk status, a move that fulfilled founder Ted Roger's oft-made promise to win top marks - or at least a "triple-B" - from credit-rating agencies.

Rogers sold $1.4-billion of 10-year debt that features a 6.8-per-cent coupon, and another $350-million of 30-year bonds that pay 7.5-per-cent interest.

Cash raised from selling these new bonds will be used to retire existing debt, and the offering also helps pay for Rogers' recent $999-million (Canadian) purchase of new wireless spectrum.

Investor interest in the Rogers deal was overwhelming, with close to $6-billion (U.S.) of orders submitted from 100 institutions, according to bond market sources. The appeal rests in Rogers' ability to generate reliable amounts of cash from market-leading positions in growth sectors - cellphone, cable and related media business lines. This financing marked the largest triple-B-rated bond issue done in North America last month.

Scotia Capital Inc. acted as lead manager, while TD Securities Inc., RBC Dominion Securities Inc. and Merrill Lynch & Co. Inc. put in a shoulder as co-managers on the transaction.

The fact that a triple-B-rated company can raise this much cash in a choppy credit market may provide some comfort for BCE lenders, despite the fact that BCE debt, which will be non-investment grade, will be marketed to a completely different set of investors when it goes to market this fall.

That's when the banks are scheduled to finally finance the $35-billion (Canadian) leveraged buyout of the telecom company. Citigroup and TD Securities are part of the BCE lending syndicate, along with Deutsche Bank and Royal Bank of Scotland. Of course, investment-grade Rogers is likely an easier pitch than junk-rated Bell Canada bonds. (And it's hard to describe just how weird it feels to write that sentence.)

Oil patch cash goes private

Bragging rights for this year's biggest oil patch equity financing belong to a company that's really a tax shelter.

In a period that's seeing all sorts of fundraising by private companies, raised $625-million (Canadian) this spring in a private placement of shares, with the cash earmarked for developing properties in the Bakken oil play in Saskatchewan.

The Shelter Bay share sale was the largest equity financing seen in the energy sector during a relatively quiet first six months of the year, according to a recent report from Sayer Energy Advisors. Sayer analyst Crystal Holdershaw said total debt and equity underwriting in the oil patch was $6.8-billion, down from $12.8-billion in the first six months of 2007.

Shelter Bay was created as a privately held subsidiary of Crescent Point Energy Trust in the wake of the federal government's 2006 crackdown on the trust sector.

Shelter Bay is run by Crescent Point executives, and is expanding through acquisition, something the new federal tax rules prevent the parent trust from doing. Another large private energy company, Canbriam Energy Inc., raised $300-million in an equity offering that is earmarked for projects that include drilling in the Montney region in northeastern British Columbia. Canbriam's backers include Warburg Pincus and ARC Financial.

Sayer also noted a flurry of financing activity among privately held junior oil and gas plays, with TriAxon Resources Ltd. pulling in $47-million and Spry Energy raising $22-million.

RBC develops niche

RBC Dominion Securities Inc. has established an expertise in what's expected to be a booming market over the next three years, converting income trusts back into common stock companies.

Two large trusts morphed back into companies in recent weeks, with trucking firm TransForce Inc. and loyalty rewards firm Groupe Aeroplan Inc. making the switch well ahead of the 2011 deadline for new, more onerous taxation of the sector.

TransForce revealed last week that conversion cost $9.9-million, a price tag that reflected changes in the company's incentive plan along with the cost of lawyers and bankers. Aeroplan spent $3.5-million on the exercise.

RBC Dominion teamed up with National Bank Financial, law firm Heenan Blaikie and the accounting whiz kids at KPMG Inc. to advise TransForce on its transformation.

Aeroplan called on RBC Dominion, TD Securities, law firm Stikeman Elliott LLP and PricewaterhouseCoopers LLP to flip its structure.

*****

Globe Investor Magazine online poll results

Given how volatile and uncertain the market is, how much cash do you have in your portfolio?

Less than 5%: 33%

5% to 20%: 29%

More than 50%: 23%

21 to 49%: 15%

Total votes: 279

Since July 25, 2008

Total votes: 279 since July 25, 2008

To vote on this poll and others, go to Globeinvestor.com/magazine

KATHRYN TAM/THE GLOBE AND MAIL