AT&T Inc. is in talks with banks for a new $ 5 billion term loan as it seeks other short-term financing options amid soaring commercial paper costs, people familiar with the matter say .

Talks are still ongoing and details may change, said the people, who have asked not to be named because the talks are private. The phone and media giant, which has the highest debt of any non-financial corporation in the United States, was initially discussing a $ 3 billion loan last week.

AT&T also canceled its $ 4 billion fast-track share buyback plan on Friday, less than a month after its announcement, as part of a larger effort to increase flexibility as financial markets continue to suffer. of the spread of the coronavirus.

The loan is expected to last less than a year and the price is being discussed at 150 basis points against the London interbank offered rate, the sources said. The price of AT & T’s existing five-year gun has a drawn margin 112.5 basis points lower than Libor, according to a filing.

The one-month commercial paper for AT&T was offered at 3% on Monday, down from 1.95% last week, a trader said. This rate is expected to fall, the trader added, as a result of Federal Reserve support for this market, which companies typically use to meet short-term cash needs like payroll.

Representatives from Bank of America Corp., which is the agent bank for the new loan, and AT&T declined to comment.

AT&T, ranked two steps above junk by Moody’s Investors Service and S&P Global Ratings and four steps above high yield by Fitch Ratings, is one of dozens of companies asking banks for new lines of credit to increase liquidity as the commercial paper market remains tight.

AT & T’s commercial paper is rated A2 / P2. Three-month borrowing costs for these lower-grade non-financial issuers more than doubled to 3.87% on Thursday, from 1.7% two weeks ago, according to Federal Reserve data.

Paula Seligson, Bloomberg

The AT&T logo outside of AT&T headquarters on March 13, 2020 in Dallas, Texas.


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