AltaGas sets a bid price for hybrid notes of C$200 million at 5.375%, maturing in 2055

AltaGas Ltd. has announced the pricing of a C$200 million offering of 5.375% fixed-to-fixed Junior Subordinated Notes Series 4, maturing on December 5, 2055. These subordinated notes may be redeemed after five years.

The truth is that I am surprised by this move from AltaGas in the current economic context. Do they really need to issue debt for such a long term? Thirty years is practically an eternity in today's financial markets, especially with the uncertainties we face.

The offering is expected to close around September 5, 2025. The company intends to use the net proceeds to redeem or repurchase its Series A Cumulative Redeemable Preferred Stock with a 5-year reset rate and Series B Cumulative Redeemable Preferred Stock with a floating rate.

As an investor, I am concerned about this strategy. They are replacing one type of funding with another that has a much longer maturity, which could indicate short-term liquidity problems that they are trying to solve with long-term commitments. The interest rate also does not seem particularly attractive to me considering the duration of the commitment.

It will be necessary to monitor how the market reacts to this issuance and what impact it has on the overall financial structure of AltaGas. Personally, I would exercise some caution with this type of long-term financial movements.