A recent public issuance of hybrid debt provides an innovative
opportunity for public entities seeking to raise funds.
TransCanada PipeLines Limited (TCPL) recently raised US$750,000,000
through a public issuance of hybrid debt notes by TransCanada Trust
(the Trust). The Trust is a Canadian resident trust, all of
the units of which are owned by TCPL. The issuance of the
hybrid debt notes (the Notes) provided TCPL with a cost-effective
means of raising capital, which qualified for Basket "C"
equity treatment by Moody's and intermediate equity credit with
S&P. It was anticipated that the Notes would be issued
primarily to U.S. residents.
The offering of the Notes closed on May 20, 2015. The
Trust in turn used the proceeds from the offering to acquire
subordinated notes (the Sub Notes) from TCPL. As a result,
the money borrowed under the offering was available to TCPL.
