Brookfield Infrastructure Finance to Sell $25 Notes

Brookfield Infrastucture Finance, a subsidiary of Brookfield Infrastructure Partners LP (BIP) has announced a new subordinanted note with a maturity date in 2081.

The company has 2 preferred units currently outstanding with coupons of 5.00% and 5.125%.

This issue will be investment grade with yield talk in the 5% area.

The preliminary prospectus is here.

EarlyBird was right on this one.

20 thoughts on “Brookfield Infrastructure Finance to Sell $25 Notes”

  1. Brookfield’s like an octopus.
    Any idea how this one is rated?
    The BAMH – Brookfield Finance – carries a rare S&P BBB.

    1. Brookfield is one of the most successful companies of all time. Go back to 1985. You can invest in BRK or BAM. Guess which made you more money?

      1. Bob – I thought Prem Watsa and Fairfax was the BRK-equivalent in Canada?
        I’ve held their 8.75% senior debt for years –

        1. FJ – Prem is the Canadian version of Buffet in many senses. For the long term I would surely put money into Fairfax. And how I wish I had done so years ago with BAM.

          1. Prem’s Blackberry bet is finally paying off, though his short hedges keep eating his gains. The ’37 is actually a 7.75% coupon.

        2. FJ -5 years ago Prem was definitely considered to be a financial wiz in Canada however his selections have really suffered since 2016. 5 yr returns are: FFH -15% , BRK.b +101% and BAM.a +105%. I invested in his Fairfax India fund a few years ago thinking he would have some good insights however ended up selling it after about 18 months of subpar performance.

          1. Useful info – for each company I seek to pick the best place to park capital. BAM: I own some debt purchased some time ago but for the long run I want their equity and that’s most of my holdings. Fairfax: I like the preferred right now. Maybe Prem will get the mojo back.

            I hope that BAM can maintain the streak. They have a nose for making money. The Interpipe deal is typical BAM. Hate them if you want to but it will pay off handsomely one way or another.

          2. Exactly. Prem predicted 2009-9 well, but then expected another collapse after 2012-13 to the present, and his shorts have hurt.
            I only hold the ’37/7.75% senior debt, which I believe still has the BBB- S&P rating (which never made me blink).

            Bob – I assume you’re accessing FFH preferred on IB to access OTOTC?

            1. Fredson – I trade Fairfax prefered at IBKR in CA$ with their TSX tickers. Example FFH.PR.C, rather than OTC equivalent of FXFLF.

              Not bought any in some time as prices are not to my liking.

              .

  2. BKIFF.

    I own a lot of BIP but will not buy this one. For the long run, own the partnership, BIP. Put it in a qualified account, never pay taxes, never deal with the K-1. I’m not crazy about the present price of BIP for new money but for long term total return it’s the place to be.

    1. Dumping a 5.35% min rate pref for 5% (almost perpetual) debt. No brainer for BIP.

      BTW, look in the prospectus for the Automatic Exchange provision. If the company ever gets into bad trouble your note turns into presumably worthless preferred. This is now a common provision in Canadian and European issues (mandatory in many cases) and, I expect, will come to the U.S. at some point.

  3. Off topic, but many corporates greatly extending maturity dates on recent debt issuances – Brookfield, recent Amazon offering, etc.

    One would think the US Treasury would do the same….

  4. Is this issue considered debt for US tax purposes and will have a 1099 verses a K-1?

    1. Debt never has a K-1, even from a partnership. It will be taxable debt which is to say ordinary tax rates. You get a 1099. Should be no withholding.

      1. “Never Say Never Again.” – James Bond. 🙂

        Tax Treatment of the Notes
        The determination of whether an instrument is properly treated as indebtedness or equity for U.S. federal income tax purposes is based on all the relevant facts and circumstances at the time the instrument is issued. There is no direct legal authority as to the proper U.S. federal income tax treatment of an instrument with terms that are substantially identical to the terms of the Notes. In the absence of authority directly addressing the proper treatment of instruments such as the Notes, to the extent required to do so, we intend to treat the Notes as debt for U.S. federal income tax purposes.
        …. the IRS or a court may conclude that the Notes should be treated as equity for U.S. federal income tax purposes (as described below). Prospective investors should consult their tax advisers as to the proper characterization of the Notes for U.S. federal income tax purposes. ”

        Consequences if the Notes are Treated as Equity for U.S. Federal Income Tax Purposes
        If the Notes are recharacterized as equity for U.S. federal income tax purposes, the tax consequences to an investor in Notes may be materially different from the consequences described above…. In particular, because the Issuer is disregarded as a separate entity for U.S. federal income tax purposes, in the event of recharacterization, the Notes are expected to be treated as equity interests in a partnership for U.S. federal income tax purposes.

        1. You will find that disclaimer language in all Brookfield pref and debt prospecti. Boil it all down, it’s debt.

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