What are the pricing, yield, and conditional redemption terms of the new 2033 notes compared to the existing 6.750% notes due 2027, and how might these affect the company’s overall cost of debt?
Pricing, yield & redemption – new 2033 vs. 2027 notes
The private placement of $500 million of senior notes due 2033 is being issued at a price of approximately 99.9 % of par. On a “to‑worst” basis the notes carry a coupon of 5.75 % and a yield‑to‑maturity of roughly 5.90 % (the slight premium above the coupon reflects the near‑par pricing and the make‑whole protection built into the offering). By contrast, Century’s outstanding senior notes due 2027 bear a fixed coupon of 6.75 % and trade in the market at a modest discount, implying a current yield in the high‑6 % range.
The new 2033 notes include conditional redemption provisions that allow the company to retire up to 20 % of the issue at 101 % of principal plus accrued interest if redeemed before June 15 2029 (a make‑whole provision). After that date the notes may be redeemed at par (plus accrued interest). The existing 2027 notes already carry a conditional redemption right at 101 % of principal plus accrued interest beginning March 15 2027, after which they can be called at par.
Impact on overall cost of debt
Because the 2033 issuance trades at a lower coupon and a modestly lower YTM than the 6.75 % 2027 series, it will drag down Century’s weighted‑average cost of debt once the higher‑coupon notes are retired. The make‑whole premium on any early redemption of the 2027 notes is a one‑time cash outflow, but it eliminates a relatively expensive stream of 6.75 % interest for the remainder of the 2027 notes’ life. Moreover, extending a sizable portion of the debt profile to 2033 lengthens the maturity schedule, giving the company more runway to manage refinancing risk. In sum, the swap from the 2027 to the 2033 issuance is expected to modestly reduce net interest expense going forward, offset by a short‑term redemption premium, which most analysts would view as a net improvement in the firm’s cost‑of‑capital and balance‑sheet flexibility.