Starbucks Corp. sold $1 billion of bonds to help finance its plan to pay out more money to shareholders.
The world's biggest coffee chain offered bonds in two parts, according to a person with knowledge of the matter. The longest portion of the offering, a 30-year security, yields 97 basis points more than Treasuries, down from initial talk of between 1.20 percentage points and 1.25 percentage points, said the person, who asked not to be identified as the deal is private.
Proceeds will be used for cash dividends, share buybacks, possible acquisitions and other company needs, according to a filing Monday. Earlier this month Starbucks said it plans to return $15 billion to stockholders through a combination of dividends and equity repurchases over a three-year period starting next year. It also said it was boosting its quarterly dividend to 30 cents a share from 20 cents.
The company's capital return plan spurred Moody's Investors Service to downgrade Starbucks' unsecured ratings one notch to A3, four steps above junk. Fitch Ratings also downgraded Starbucks to an equivalent A-, citing the same reasons, according to a Nov. 3 report. Fitch estimates that total debt could increase by as much as $6 billion to fund the program.
Starbucks had nearly $4 billion of long-term debt outstanding as of Oct. 1, according to a regulatory filing. It last sold bonds in March, in a transaction denominated in Japanese yen.
Citigroup, Goldman Sachs and U.S. Bancorp managed the bond sale, according to the Monday filing.
From: Bloomberg News
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