(Bloomberg) — Walgreens Boots Alliance Inc. sold $750 million in high-yield bonds on Thursday, pricing them lower than initially expected as demand allowed transaction volume to increase 25 percent.
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The drugstore chain had originally planned to sell $600 million in notes callable in 2026, but the deal was upped Thursday afternoon, according to a person familiar with the matter who asked not to be identified because the information is confidential. The notes were trading at par with a coupon of 8.125 percent, while the original plan had been to yield in the mid- to high-8 percent range, the person said.
Still, this value is significantly higher than the bonds Walgreens issued during its time as an investment-grade company.
The transaction was led by JPMorgan Chase & Co. Bloomberg reported two weeks ago that the bank was canvassing investors for a bond sale that could yield around 7.5 percent.
JPMorgan declined to comment. Walgreens did not respond to a request for comment.
Walgreens had previously filed a securities offering with regulators on Thursday, saying the proceeds from the bond sale and existing cash on hand would be used to service the 3.8 percent bond due on November 18. The outstanding volume of this bond amounts to $1.16 billion, according to the company.
Both S&P Global Ratings and Moody’s Ratings downgraded Walgreens’ investment-grade rating in December due to the company’s ongoing problems in the retail sector.
S&P said in its July downgrade that Walgreens’ refinancing needs were a “key risk.” The company has $1.4 billion in maturities in the fiscal year that begins Sept. 1 and $4.6 billion in bonds and loans coming due over the next two years, according to the credit ratings provider.
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