Morning Commentary: Brookfield to sell $750 million in two parts; ConnectOne eyes fixed-to-floaters

By Devika Patel

Knoxville, Tenn., Jan. 11 – Primary activity in the investment-grade bond market on Thursday brought two new deals to market, with Toronto-based alternative asset manager Brookfield Asset Management Inc. announcing a planned sale by subsidiary Brookfield Finance Inc. of $750 million of guaranteed senior notes in two parts, including an add-on, and Englewood Cliffs, N.J., bank holding company ConnectOne Bancorp, Inc. reporting that it will sell fixed-to-floating rate subordinated notes due 2028.

The SEC registered Brookfield deal consists of $500 million of new notes due 2028 plus a $250 million additional offering of 4.7% notes due Sept. 20, 2047.

Brookfield sold $550 million of the 4.7% notes in an issue that priced on Sept. 11 and settled on Sept. 14. The notes were priced at 99.219 to yield 4.749% with a spread of 200 basis points over Treasuries.

The new Brookfield notes have a make-whole call until Oct. 25, 2027, and then a par call. The 2047 notes have a make-whole call until March 20, 2047, and then a par call. Both notes have a change-of-control put at 101.

Deutsche Bank Securities Inc. and BofA Merrill Lynch will be the joint bookrunners for the new issue, which is raising funds that will be used for Brookfield’s general corporate purposes.

The Brookfield notes are expected to price on Thursday and settle on Jan. 17 and will be guaranteed by Brookfield Asset Management.

The ConnectOne notes bear interest at a fixed rate until 2023 and then at a rate based on the three-month Libor.

The ConnectOne notes are non-callable for the first five years and may be redeemed at par plus interest after that.

Keefe, Bruyette & Woods, a Stifel company, is the bookrunner and Piper Jaffray & Co. and Raymond James & Associates are the co-managers for the ConnectOne offering.

Proceeds will be used for ConnectOne’s general corporate purposes, including growth, organically or through acquisitions, debt repayment and investments and capital expenditures.

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