Alimentation Couche-Tard Inc. operates over 12,000 convenience stores in North America, Ireland, Scandinavia, Poland, the Baltics, and Russia. The Laval, Quebec–based company generates income primarily from the sale of tobacco products, grocery items, beverages, fresh food (including quick service restaurants), and fuels. It operates in Canada mainly under the Mac’s and Couche-Tard brands.(a) from the company’s 2020 annual report in Exhibit 10.12 details Couche- Tard’s senior unsecured notes (in millions).

Required 

a. Look at Couche-Tard’s two loan amounts (which are portions of a bond issue that have different maturity dates, interest rates, and so on) of senior unsecured notes issued in 2020. Comment on the relationship between the interest rates and the length of time to maturity of the notes. As an investor, explain why this relationship is important to you. 

b. Explain why Couche-Tard may have wanted to spread the 2020 borrowings across two loan amounts with different maturities. 

c. What do we know about these notes given that the effective rates of interest are higher than the coupon rates for all 11 loan amounts?

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(a) Senior unsecured notes As at April 26, 2020, the Corporation had US-dollar-denominated senior unsecured notes totaling $4,000.0, Canadian-dollar- denominated senior unsecured notes totaling CA $1,950.0, Euro-denominated senior unsecured notes totaling €750.0 and Norwegian-krone-denominated senior unsecured notes totaling NOK 675.0, divided as follows: November 1, 2012 issuance August 21, 2013 issuance June 2, 2015 issuance February 18, 2016 issuance May 6, 2016 issuance July 26, 2017 issuance July 26, 2017 issuance July 26, 2017 issuance July 26, 2017 issuance January 22, 2020 issuance January 22, 2020 issuance Nominal amount CA $250.0 CA $300.0 CA $700.0 NOK 675.0 €750.0 $1,000.0 CA $700.0 $1,000.0 $500.0 $750.0 $750.0 Maturity November 1, 2022 August 21, 2020 June 2, 2025 February 18, 2026 May 6, 2026 July 26, 2022 July 26, 2024 July 26, 2027 July 26, 2047 January 25, 2030 January 25, 2050 Coupon rate 3.899% 4.214% 3.600% 3.850% 1.875% 2.700% 3.056% 3.550% 4.500% 2.950% 3.800% Effective rate as at April 26, 2020 3.963% 4.317% 3.649% 3.927% 1.944% 2.819% 3.133% 3.642% 4.576% 3.033% 3.880% Interest payment dates May 1st and November 1st August 21st and February 21st June 2nd and December 2nd April 20th and October 20th May 6th July 26th and January 26th July 26th and January 26th July 26th and January 26th July 26th and January 26th July 25th and January 25th July 25th and January 25th