Petro-Canada, New Debt For Old Debt (PCZ)

Petro-Canada (NYSE: PCZ) is selling a total $1.5 Billion in debt to a syndicate of underwriters in the United States.  Of the full offering, some $600 million in debt of 6.05% 10-year Notes due May 15, 2018 and $900 million US of 6.80% 30-year Notes due May 15, 2038.

The net proceeds of this debt offering will be used to repay short-term notes payable and existing outstanding debt under its credit facilities.  The balance will be used for additional working capital. Citigroup, Deutsche Bank, and HSBC are acting as joint book running managers for the offering, which should close on May 15, 2008.

The offering is being made in the U.S. under the company's existing base shelf prospectus, which was dated March 31, 2008 and allowed for the issuance of up to $4 billion(U.S.) in debt securities.

The company also said it believes the debt securities are expected to be assigned a rating of BBB (stable) by Standard & Poor's Ratings Services and Baa2 (stable) by Moody's Investors Service. 

As noted, new debt for old debt.... same ratings... no real change in either direction.

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Jon C. Ogg
May 12, 2008