AT&T gets ‘attractive interest rates for long periods’ in debt sales

By Devika Patel

Knoxville, Tenn., June 17 – AT&T Inc. management was pleased with the rates and terms garnered on its recent U.S. and euro offering of notes, and the company’s bonds are trading well, a top executive said.

“If you look at the market, we’ve done some significant debt deals,” senior executive vice president and chief financial officer John Stephens said at the virtual Credit Suisse 22nd Annual Communications Conference on Wednesday.

“We’ve paid down a ton of debt in the last few months.

“We went to market a couple of weeks ago in the euro market, the U.S. and we were able to access significant amounts, a little over $15 billion, at very attractive interest rates for long periods of time, so the marketplace, the credit markets certainly respect our cash flows.

“They’re speaking with their pocketbooks, but if you look at where our 10-year, our 2031 bonds, our 2051 bonds are trading and you look at how they’ve traded, we’re traded at better rates, higher quality standards than we did at the beginning of the year, than we did in January and February, so the market really is respecting us,” he said.

The company’s cash flows are good, Stephens said, adding that challenges are being seen in the media business, such as delays in releasing some movies, but that the company “certainly can handle that.”

“We’re a strong enough, big enough, large enough company, so we feel really good about that. ... It’s something that we put a lot of effort into over the years and continue to feel like manage it well.

“Last year, we did $29 billion of free cash flow. That’s a dramatic number.”

On May 21, AT&T priced $12.5 billion of global senior notes in five tranches.

AT&T sold $2.5 billion of 2.3% seven-year notes at a spread of Treasuries plus 35 basis points. These notes priced at 99.852.

A $3 billion tranche of 2.75% 11-year notes was sold with a Treasuries plus 40 bps spread. These notes priced at 99.839.

AT&T sold $2.5 billion of 3.5% 21-year notes at a spread of Treasuries plus 60 bps. These notes priced at 99.69.

A $3 billion tranche of 3.65% 31-year notes priced at a Treasuries plus 75 bps spread. These notes priced at 99.613.

Finally, there was $1.5 billion of 3.85% 40-year notes at a spread of Treasuries plus 80 bps. These notes priced at 99.574.

BofA Securities, Inc., Goldman Sachs & Co. LLC, Mizuho Securities USA Inc., RBC Capital Market LLC and Wells Fargo Securities LLC were the active bookrunners.

BBVA Securities Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, ICBC Standard Bank plc, J.P. Morgan Securities LLC, MUFG, SG Americas Securities, LLC and TD Securities (USA) LLC were also bookrunners.

Proceeds were earmarked for the early redemption or repayment of the company’s $2,750,441,000 principal amount of 2.45% global notes due 2020, its $1.43 billion principal amount of 5.5% global notes due 2047, the $682,696,000 principal amount of 4.6% global notes due 2021 and the $1,694,999,000 principal amount of 2.8% global notes due 2021.

Additionally, proceeds were slated to repay or redeem the $5.5 billion outstanding amount under AT&T’s term loan credit agreement due Dec. 31 and the $400 million tranche A facility under AT&T’s term loan credit agreement also due Dec. 31.

On Tuesday, the company priced $1.05 billion of global senior notes due Sept. 1, 2050 (Baa2/BBB/A-) at par to yield 3.75%.

Deutsche Bank AG, Taipei Branch, Morgan Stanley Taiwan Ltd. and Standard Chartered Bank (Taiwan) Ltd. were the bookrunners.

The company plans to list the Formosa bonds on the Taipei Exchange and apply to list the notes on the New York Stock Exchange.

Proceeds from the deal will be used for general corporate purposes.

AT&T is a Dallas-based communication and entertainment company.

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