TC Energy Corp.’s liquids pipeline spinoff South Bow Corp., is gearing up to sell around $7.9 billion (US$5.8 billion) of debt in the coming months, according to a filing and people familiar with the matter.
The financing is expected to be raised in U.S. and Canadian dollars, the company confirmed. It will include $6.4 billion of senior notes and $1.5 billion of hybrids with a 50% equity component, according to a July presentation. South Bow will also put in place a $2 billion, four-year senior unsecured revolving credit facility, according to the company.
The U.S. dollar portion is likely be larger and rated in the low investment grade, according to the people, who declined to be identified as they’re not authorized to speak about it. The company expects initial debt-to Ebitda ratio to be less than five times, according to the presentation.
TC Energy expects South Bow to launch as an independent company late in the third or fourth quarter, and the capital structure is expected to be in place prior to the spinoff, Joel Hunter, chief financial officer, said during a conference call in May.
