For the second time in the past two weeks, a well-known U.S. public company has made its debut C$ debt financing. Such financings are known as Maple bonds, in effect, a foreign issuer raising C$ in the domestic market using Canadian documentation.
On Monday, United Parcel Service of America Inc. launched and priced its new issue, a $750 million seven year offering that featured a coupon of 2.125 per cent. (Given that the notes were senior notes were priced at a slight discount the yield to maturity was a tad higher at 2.154 per cent.) The notes came with an A1 rating (with a stable outlook) from Moody’s and an A+ rating (with a negative outlook from S&P.).
Three firms, BofA Merrill Lynch, HSBC and TD Securities were the joint lead and book running managers. UPS plans to use the proceeds for general corporate purposes and to repay outstanding commercial paper.
UPS’s issue was done a few days after it raised US$600 million of 2.350 per cent senior notes due 2022 and US$400 million of floating rate senior notes due 2022 in the U.S. market. According to an EDGAR filing, proceeds from those two deals were earmarked for “general corporate purposes, including the repayment of commercial paper.”
In documentation for its C$ offering, UPS said that “the notes will be our senior unsecured obligations and will rank equally and pari passu with our other unsecured and unsubordinated indebtedness.”
UPS entered the market two weeks after another debutant, PepsiCo. Inc., raised $750 million at 2.150 per cent.
Between those two deals, the country’s largest non-bank corporate borrowing in about six years was wrapped up when AB InBev closed a $2 billion offering. That issue was also one of the largest Maple financing.
Maple bond financings are attractive to issuers because they broaden and diversify the investor base. But market factors combine to make them more – or less – attractive than a financing in their domestic market.