Monday, June 1, 2015

Starbucks Adds Some Foam to the Balance Sheet

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:
We expect Starbucks will continue to deliver solid performance gains as it grows its store footprint, mainly in international markets, and remains focused on product innovation. We believe the company could pursue more aggressive capital allocation practices, but its financial policies will keep credit protection measures in line with our current assessment of its financial risk profile.

Friday, April 24, 2015

AT&T Sells Bonds to Finance its Purchase of DirecTV

AT&T bond sale aimed at financing DirecTV acquisition.  AT&T completed a $17.5 billion corporate bond sale to help pay for its DirecTV acquisition.

The offering, which drew mixed reviews on Wall Street, is the second largest this year alone behind a $21 billion offering by Actavis in March. The all-time topper was a $49 billion deal by Verizon in September 2013.

 Investors reportedly jumped at the offering "enticed in part because the new bonds, which will mature in five to 31 years, offered more interest that the company's existing debt," a Wall Street Journal story said.