Bell Canada Enterprises (BCE) is paying dearly for its media power-play last week, as its costs are climbing, contributing to the worst month for Canada’s corporate bond market this year.
BCE’s purchase of CTV drastically changed the landscape of the digital media industry, but at $1.3 billion, it came at a huge price.
It has also played a significant role on the bond market.
BCE’s 5% bonds due in February 2017 yielded 139 basis points more than government benchmarks Tuesday, up from 134 on Sept. 9, the day before the CTV deal, according to Bloomberg data.
The spread on Bell Canada 5% bonds due in 2017 was as wide as 159 basis points in June.
Bonds of BCE rivals Rogers Communications and Shaw Communications are among the 10 worst performing of Canada’s top 50 issuers this month.
BCE, the target of a failed $52 billion buyout two years ago, agreed to buy the shares of CTV it doesn’t already own for $1.3 billion. CTV has more than 5,000 employees and operates 27 television stations across the country, 30 specialty channels and 34 radio stations across Canada.
BCE is paying investors including the Thomson family’s Woodbridge Co. cash and stock for 85 percent of CTV. BCE will also assume $1.7 billion in debt.
Standard & Poor’s affirmed its BBB+ rating on BCE after the announcement of the deal, the ratings agency said in a statement.
