Market Chatter: TransCanada Considers More Issuance After China Deal
TransCanada Corp. (TRP.TO), which announced a C$3 billion ($3 billion) oil-sands pipeline with a Chinese partner this week, said it may issue fresh debt to finance future projects and tap low-interest rates, Bloomberg reported.
The Calgary-based company behind the planned Keystone XL pipeline, has added $7 billion of projects this year, Chief Financial Officer Don Marchand told analysts on a conference call yesterday.
"We will be opportunistic in sourcing required capital given the compelling low-interest-rate environment," Marchand said, adding that the new Alberta pipeline project with a unit of PetroChina Co. Ltd. will probably be funded with cash.
TransCanada and such rivals as Enbridge Inc. (ENB.TO) and AltaGas Ltd. (ALA) will sell debt as production accelerates in Alberta's oil sands, said Brian Miron, who helps manage C$16 billion in Canadian fixed-income assets across several funds at Fidelity Management and Research in Merrimack, New Hampshire.
These companies "have incredible growth opportunities, and they're funded mostly with debt, which means these issuers will be continuing and we expect more supply to come into the marketplace," Miron said in a phone interview. His funds own Enbridge, AltaGas and TransCanada bonds.
TransCanada is among the biggest issuers of non-bank corporate debt in Canada, with almost C$19 billion in bonds outstanding, according to data compiled by Bloomberg. Enbridge, a Calgary-based pipeline competitor, has about C$10 billion.
TransCanada on Oct. 29 said it's teaming with Phoenix Energy Holdings Ltd., a unit of PetroChina, (857) to develop a pipeline project to ship oil from Northern Alberta's oil sands to Edmonton. The company last tapped the bond market in August, when it cut its commercial paper holdings and issued $1 billion of 10-year 2.5% senior notes.
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