Industry SectorsConsumer/RetailWal-Mart Shifts US$5bn in Bond Sale

Wal-Mart Shifts US$5bn in Bond Sale

US group Wal-Mart Stores, the world’s biggest retailer, has sold a total of US$5bn of debt via four parts in its biggest offering since April 2011, demonstrating that global corporate borrowers are continuing to benefit from near-record lows in both interest rates and US Treasury yields; the latter the benchmark for this type of debt.

Wal-Mart’s U$1bn of 0.6% three-year notes yield 30 basis points more than similar-maturity Treasuries, while US$1.25bn of 1.125% five-year securities pay a relative yield of 45 basis points, US$1.75bn of 2.55% 10-year bonds have an 82 basis-point spread and US$1bn of 4%, 30-year debt pays 102, according to data compiled by Bloomberg.

According to report, the deal was 2.2 times oversubscribed, emphasising the strong demand for high-credit quality debt and a growing scarcity of new securities. Wal-Mart bonds were sold by Barclays, Citigroup and Morgan Stanley and were rated Aa2 by credit ratings agency (CRA) Moody’s and AA by Standard & Poor’s (S&P).

Wal-Mart’s latest offering “is an excellent opportunity to buy the bonds of the closest thing to a bulletproof retailing credit we know,” said Carol Levenson, director of research at Chicago-based Gimme Credit, quoted in the
Financial Times
. “By virtue of its size, geographic diversification, strong free cash flow, and maniacal expense control, Wal-Mart’s credit profile remains stellar.”

The retailer said that the proceeds of the sale would be used for general corporate purposes.

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