ENB.PR.A: Pricing Clue from Long Bonds

Enbridge has just issued thirty-year notes at 5.75%, according to DBRS:

DBRS has today assigned a rating of “A” with a Negative trend to Enbridge Inc.’s $400 million 4.77% unsecured medium-term notes (Notes) issue maturing September 2, 2019 and $200 million 5.75% unsecured medium-term notes (Notes) issue maturing September 2, 2039. The Notes are being issued under the pricing supplement dated August 28, 2009, to the prospectus dated June 6, 2008, and the Trust Indenture dated October 20, 1997, as supplemented and amended from time to time.

The Notes will rank equally with all of Enbridge Inc.’s existing senior unsecured medium-term notes and debentures. Net proceeds from the sale of the above-noted securities will be used for the repayment of outstanding commercial paper or credit facility borrowings, or both, and for other general corporate purposes.

This is good to know in light of ENB.PR.A, a 5.50% straight preferred that is currently redeemable at par and closed today at 25.25-40, 4×2.

Now, issuance of $200-million at 5.75% interest doesn’t mean they can issue more; and if they could issue more they might not want to, in order to keep shareholders’ equity where the regulators like it. Never-the-less, this is a clear signal that from a straight business perspective, Enbridge can probably consider this issue as representing fairly expensive money and that the decision to keep or call ENB.PR.A relies on non-interest-rate factors.

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