Huntington (HBAN) Taps Debt Market With $500M Notes Offering
Huntington Bancshares Incorporated HBAN resorted to a private offering of unsecured subordinated notes. The company priced $500 million in principal amount of fixed-to-fixed rate notes at 100% of the aggregate principal amount. The notes carry a coupon rate of 2.487% and are set to mature in 2036.
Net proceeds from the offering will be used for general corporate purposes, including efforts to increase the assets of the company’s subsidiaries.
Huntington’s efforts to strengthen its near-term liquidity in these testing times and tap the debt market amid the current low-interest-rate environment are strategic fits.
Over the past few years, the company has expanded its footprint with a number of acquisitions. In June 2021, it closed the merger with TCF Financial Corporation to form one of the top 25 U.S. bank holding companies. In 2018, Huntington completed its acquisition of Hutchinson, Shockey, Erley & Co., a leading public finance investment bank and broker-dealer, which resulted in a larger market presence.
Thus, we believe that efforts to procure additional capital will enable the company to pursue other such inorganic growth opportunities and gain significant market share and, thereby, enhance its profitability over the long run.
With an improving debt-to-capital ratio as well as $1.5 billion of cash and due from banks (as of Jun 30, 2021), we believe that Huntington carries a lower likelihood of default of interest and debt repayments if the economic situation worsens.
However, the note offering increases the company’s long-term debt obligation. As of Jun 30, it had $7.3 billion of debt.
Shares of this Zacks Rank #3 (Hold) company have gained 45.1% over the past year compared with the industry’s rally of 39.5%.
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Recently, Franklin Resources, Inc. BEN priced a public offering of two series of notes, aggregating $450 million in principal amount. The company plans to use the net proceeds from the offering for general corporate purposes, which includes redeeming, satisfying and discharging, defeasing or otherwise repaying or retiring any long-term debt owed by the company or its subsidiaries.
This includes all or part of its $300-million, 2.800% notes due 2022 along with $250 million of Legg Mason’s 3.950% senior notes maturing in 2024. (Read more: Franklin to Procure Capital With $450M of Notes Offering)
Stocks to Consider
Farmers National Banc Corp.’s FMNB Zacks Consensus Estimate for its 2021 earnings has been revised 14.9% upward over the past 30 days. Also, it sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
First Business Financial Services, Inc. FBIZ flaunts a Zacks Rank of 1 at present. The Zacks Consensus Estimate for its 2021 earnings has been revised 2.9% upward over the past 30 days.
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