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Last week, Brookfield Asset Management Inc. (BAM - Snapshot Report) announced the issuance of C$425 million worth of medium-term unsecured notes. These notes carry a yield of 4.546% and will mature in March 2023.
 
The sale of these notes would ensure enough liquidity for redemption/repurchase of US$350 million worth 8.95% notes that matured on June 2, 2012. Moreover, the funds will be used for general and corporate purposes. These notes carry credit ratings of ‘Baa2’ (stable outlook) by Moody's Corp. (MCO - Analyst Report); ‘A –‘(negative outlook) by Standard & Poor’s; ‘BBB’ (stable outlook) by Fitch; and ‘A low’ (stable outlook) by DBRS.
 
CIBC World Markets Inc – a wholesale banking arm of Canadian Imperial Bank of Commerce (CM - Snapshot Report), Scotia Capital Inc. – corporate and investment banking subsidiary of The Bank of Nova Scotia (BNS - Snapshot Report), and TD Securities Inc – investment banking subsidiary of The Toronto-Dominion Bank (TD - Snapshot Report) are acting as joint book-runners for the offering.
 
Earlier this year, Brookfield had announced an offering of medium-term unsecured notes worth C$425 million, carrying a yield of 3.95% and maturing in April 2019. The net proceeds of the offering are to be used for refinancing US$350 million of 7.13% notes that have matured on June 15, 2012 and for general corporate purposes as well. 
 
Similar Initiatives by Other Institutions
 
Last month, CIT Group Inc. (CIT - Analyst Report) announced the pricing of a registered public offering worth nearly US$3 billion. This marks the fourth bond offering by the company this year. 
 
The public offering included US$1.75 billion of senior unsecured notes due in 2017 and US$1.25 billion of senior unsecured notes maturing in 2022. The former notes are priced at par and carry a coupon rate of 4.25%, while the latter are also priced at par but bear an interest rate of 5.00%. 
 
The sale proceeds from the offering are planned to be used for general corporate purposes. Additionally, refinancing of US$3.8 billion of 7% Series C Notes is expected by using the proceeds. 
 
Similarly, in April 2012, National Bank of Canada (NTIOF) had declared issuance of C$1 billion worth of medium-term Series 7 notes, due on April 11, 2022. These notes carry a semi-annual yield of 3.261% per annum until April 11, 2017 and thereafter a floating rate equal to the rate on 3-month CDOR plus 1.38%. This will be paid quarterly till maturity and the proceeds will be utilized for general banking purposes.
 
Conclusion 
 
The bond offerings by Brookfield reflect its funding profile conversion. We anticipate these efforts to boost the company’s future growth and increase investors’ confidence. However, a slow economic recovery and stringent regulatory landscape remain the major causes of concern.
 
Brookfield currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating. 
Last week, Brookfield Asset Management Inc. (BAM - Snapshot Report) announced the issuance of C$425 million worth of medium-term unsecured notes. These notes carry a yield of 4.546% and will mature in March 2023.
 
The sale of these notes would ensure enough liquidity for redemption/repurchase of US$350 million worth 8.95% notes that matured on June 2, 2012. Moreover, the funds will be used for general and corporate purposes. These notes carry credit ratings of ‘Baa2’ (stable outlook) by Moody's Corp. (MCO - Analyst Report); ‘A-‘ (negative outlook) by Standard & Poor’s; ‘BBB’ (stable outlook) by Fitch; and ‘A low’ (stable outlook) by DBRS.
 
CIBC World Markets Inc – a wholesale banking arm of Canadian Imperial Bank of Commerce (CM - Snapshot Report), Scotia Capital Inc. – corporate and investment banking subsidiary of The Bank of Nova Scotia (BNS - Snapshot Report), and TD Securities Inc – investment banking subsidiary of The Toronto-Dominion Bank (TD - Snapshot Report) are acting as joint book-runners for the offering.
 
Earlier this year, Brookfield had announced an offering of medium-term unsecured notes worth C$425 million, carrying a yield of 3.95% and maturing in April 2019. The net proceeds of the offering are to be used for refinancing US$350 million of 7.13% notes that have matured on June 15, 2012 and for general corporate purposes as well. 
 
Similar Initiatives by Other Institutions
 
Last month, CIT Group Inc. (CIT - Analyst Report) announced the pricing of a registered public offering worth nearly US$3 billion. This marks the fourth bond offering by the company this year. 
 
The public offering included US$1.75 billion of senior unsecured notes due in 2017 and US$1.25 billion of senior unsecured notes maturing in 2022. The former notes are priced at par and carry a coupon rate of 4.25%, while the latter are also priced at par but bear an interest rate of 5.00%. 
 
The sale proceeds from the offering are planned to be used for general corporate purposes. Additionally, refinancing of US$3.8 billion of 7% Series C Notes is expected by using the proceeds. 
 
Similarly, in April 2012, National Bank of Canada (NTIOF) had declared issuance of C$1 billion worth of medium-term Series 7 notes, due on April 11, 2022. These notes carry a semi-annual yield of 3.261% per annum until April 11, 2017 and thereafter a floating rate equal to the rate on 3-month CDOR plus 1.38%. This will be paid quarterly till maturity and the proceeds will be utilized for general banking purposes.
 
Conclusion 
 
The bond offerings by Brookfield reflect its funding profile conversion. We anticipate these efforts to boost the company’s future growth and increase investors’ confidence. However, a slow economic recovery and stringent regulatory landscape remain the major causes of concern.
 
Brookfield currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating.

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