HP Inc. HPQ recently announced the pricing of a senior unsecured notes offering worth $3 billion. The company stated that notes would be issued in three tranches of different maturities and carrying different interest rates as well.
The company prices notes worth $1.15 billion, having annualized interest rate of 2.2% and maturity in 2025, at a public offering price of 99.769%. Another 3% senior notes are due 2027 worth $1 billion at a discounted price of 99.718%. Principal amount worth $850 million carrying 3.4% interest and maturity in 2030 is priced at 99.790%.
Per the company, Goldman Sachs & Co. LLC, BNP Paribas Securities Corp., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are acting as joint book-running managers for the offering.
HP intends to use the proceeds to fund its debt tender offers of four different series notes worth $2.55 billion. The remaining amount would be used for general corporate purposes, including repayment and refinancing of debt, capital expenditures, working capital, and share repurchases.
HP Inc. Price and Consensus
HP Inc. price-consensus-chart | HP Inc. Quote
Offering to Boost HP’s Financial Flexibility
Borrowing costs continue to be low, enabling companies to obtain easy financing. With the U.S. treasuries offering low rates, corporate bonds and borrowings from banks are now witnessing high demand.
We believe the offering will boost this Zacks Rank #3 (Hold) company’s financial flexibility and help meet its financial obligations in an efficient way. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and reward higher returns to stockholders.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
At the end of fiscal second-quarter 2020, HP’s cash and cash equivalents totaled $4.1 billion compared with the $4.2 billion witnessed at the end of the first quarter. The decline was mainly due to the business disruptions caused by the coronavirus pandemic.
Companies Enhancing Liquidity Amid Coronavirus Crisis
HP’s latest senior notes offering and sizeable liquidity position amid the coronavirus-led economic and business uncertainties bode well. In the wake of the pandemic, companies with improved liquidity can sail through these volatile times.
Earlier this week, Palo Alto Networks PANW announced its plan of borrowing $1.75 billion through a senior notes offering. In June, Agilent Technologies, Inc. A issued $500 million worth of 2.1% senior notes due June 2030.
Last month, MGM Resorts International MGM borrowed $750 million through offering 6.75% senior notes due 2025. In April, Spirit Realty Capital, Inc. SRC fortified its balance-sheet strength by closing a new $200-million unsecured term loan facility.
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