Reuters has reported:
BCE Inc. has entered talks with a group of Canadian pension funds that could lead to the company being taken private, Canada’s top telecommunications group said on Tuesday.
I have seen long Bell bonds offered at 270bp over Canadas – a widening of 50bp over yesterday.
I have previously noted the event risk on the BCE preferreds … which, while having been hurt lately, have suffered not nearly as much as the Bonds … a widening of 50bp in one day? on bonds with a duration of about maybe 12? That’s 6% on price.
Retail – which means holders of BCE preferreds – may well do what retail is best at: ignore the situation until they’ve been told 20 times, then over-react big time.
This could be interesting.
[…] Following the announcement that BCE is in talks with privatizers, DBRS has announced that they: today placed the ratings of BCE, A (low)/R-1 (low)/R-2 (high)/Pfd-2 (low), and its wholly owned subsidiary, Bell Canada, “A”/R-1 (low)/BBB (high), (collectively, BCE or the Company) Under Review with Negative Implications following the Company’s announcement today that it is reviewing strategic alternatives with a view to maximize shareholder value….Given the Company’s current operating structure, DBRS notes that any transaction that takes leverage above 4.0 times debt to EBITDA could cause its ratings to decline below the investment-grade threshold of BBB (low). […]