Source: Globe & Mail

Bell Canada raised an impressive $1-billion in new debt Monday, a deal that people close to the transaction say was very well received. (The debt is guaranteed by parent company BCE Inc. (BCE-T34.71-0.13-0.37%))

The good reception is in part because Bell was expected to tap the markets to fund help its acquisition of CTV Inc. The company also had little outstanding debt in the five-year range, worth about 4 per cent of its total debt, noted BMO Nesbitt Burns analyst Trevor Bateman.

But telecom debt in general has been hot in 2010. As of Oct. 31, year-to-date total return hit almost 17 per cent, outperforming the corporate composite return. Mr. Bateman thinks there is room for the sector’s bonds to continue outperforming because spreads are still off their historical averages, once you account for the credit crisis.

Because investor demand for telecom debt is so strong, there are questions about who could come to market next. BMO says Shaw Communications is likely to issue because it needs to fund the acquisition of CanWest Global Communications. Shaw also recently filed a $4-billion base shelf prospectus.

Bell’s new 5-year debt pays 3.6 per cent and was priced at a spread of 124 basis points above Government of Canada bonds. BMO Nesbitt Burns, CIBC World Markets and National Bank Financial were the key underwriters.

© Globe and Mail