Starbucks is selling $750 million in senior unsecured bonds this week. It is the second time the coffee chain has issued debt since 2007, according to S&P Capital IQ LCD. Bonds mature in 2022 and 2045 and early indications are for yields near 2.8% and 4.37%, respectively, Capital IQ LCD estimates.
The bonds are mostly to refinance Starbucks’ existing $550 million 2017 bonds, which have a 6.25% coupon. The additional debt can be used for share buybacks, dividends, acquisitions or general expansion plans, according to the company
Standard & Poor’s Ratings Services is giving the new bonds an A- credit rating. The rating agency projects that with the additional bonds, Starbuck’s total debt to EBITDA will increase to 1.1x from 1.0x before the addition of this debt. According to S&P’s release: