American Tower Corporation AMT has priced a public offering of two different issues of unsecured senior notes. Specifically, the 2025 notes with aggregate principal amount of $750 million, carrying an interest rate of 2.4% per annum, have been priced at 99.905%.
Another offering of 2030 senior notes, with aggregate principal amount of $750 million, have been priced at 99.560%. These securities carry an interest rate of 2.9% per annum.
Net proceeds from the offering are estimated to be roughly $1,483.4 million, after deducting estimated offering expenses and underwriting discounts.
American Tower intends to utilize net proceeds from the offering to reduce outstanding balances under its $2.25-billion senior unsecured revolving credit facility, which was amended and restated in December 2019.
The company’s efforts to tap the debt market amid low interest-rate environment are a strategic fit. Furthermore, since unsecured notes can be borrowed at lower rates, the new debt will result in lower funding cost.
Notably, American Tower has a substantially-leveraged balance sheet. At the end of third-quarter 2019, the company had total outstanding indebtedness of around $21.6 billion. Further, at the end of the quarter, its net leverage ratio was at 4.1x. Such high-debt levels might impede cash-flow growth, which is needed to meet future debt obligations. Moreover, this may keep the company from accessing the debt market and refinancing at suitable rates.
Hence, by paying down its debt obligations, this offering is likely to provide financial flexibility to American Tower. The note offering is also anticipated to boost its balance sheet and enhance the company’s liquidity position. In addition, it reflects the company’s focus to efficiently address its financial obligations
Over the past six months, shares of this Zacks Rank #3 (Hold) company have rallied 5.8% compared with the industry’s growth of 0.7%.
Stocks to Consider
CyrusOne Inc CONE currently carries a Zacks Rank of 2 (Buy). The company’s funds from operations (FFO) per share estimate for 2019 remained unrevised at $3.56 over the past month. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Duke Realty's DRE Zacks Consensus Estimate for 2019 FFO per share moved marginally north to $1.44 in two months’ time. It carries a Zacks Rank of 2, at present.
Boston Properties, Inc.’s BXP Zacks Consensus Estimate for 2019 FFO per share remained unchanged at $6.99 over the past month. Currently, it carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Tower Corporation (REIT) (AMT) : Free Stock Analysis Report
Duke Realty Corporation (DRE) : Free Stock Analysis Report
CyrusOne Inc (CONE) : Free Stock Analysis Report
Boston Properties, Inc. (BXP) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research