So much for shaky markets.
In the midst of a deal drought, Fortis Inc. hit the market with a big bought offering Tuesday, issuing $601-million in common shares. The money will be used to help fund its $1.5-billion acquisition of New York-based CH Energy Group.
Though the timing of this offering wasn't known, the deal had been widely expected. Back in May, rating agency Standard & Poor's boosted the outlook for Fortis's rating from 'credit watch' to stable on the assumption that the company will raise at least $600-million in common shares and $250-million in preferred shares. And what a surprise, we got a common share deal of that size today.
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On the surface, it may seem odd that Fortis is issuing equity now because the market is still choppy. However, its stock has been pretty stable this year -- basically flat since January -- making Fortis one of the few names that investors have a decent chance of counting on.
As for the banking side of things, the deal is a reminder that Bay Street is fortunate to have a relatively steady stream of mergers and acquisitions this year. There's been a flurry from Quebec of late, which has boosted revenues, and this takeover came with a big bought deal component the benefits most of the Street.
CIBC World Markets, Scotia Capital and TD Securities co-led the latest offering.