(Bloomberg) — Walgreens Boots Alliance Inc. has started marketing its first high-yield bond sale, raising funds to address a note that’s due in November.
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The drug-store chain is looking to sell $600 million of five-year bonds that are callable in 2026, according to a person familiar with the matter who asked not to be identified because the information is private. Initial pricing discussions call for a yield in the mid-to-high 8% range, much higher than the notes Walgreens issued during its tenure as an investment-grade company.
JPMorgan Chase & Co. is leading the transaction, an investor call will be held at 11 a.m. New York time and the bond is expected to price today, the person said. Bloomberg reported two weeks ago that the bank was sounding out investors on a note sale that could yield around 7.5%.
JPMorgan and Walgreens didn’t immediately respond to a request for comment.
Walgreens earlier Thursday filed a shelf offering with regulators that said proceeds from the bond sale — as well as cash on hand — to address its 3.8% note due Nov 18. There’s $1.16 billion of that bond outstanding, the company said.
S&P Global Ratings and Moody’s Ratings both stripped Walgreens of such status since December amid the company’s ongoing retail struggles.
S&P said in its July downgrade that Walgreens’ refinancing needs are a “key risk”. The company has $1.4 billion of maturities in the fiscal year starting Sept. 1 and $4.6 billion of bonds and loans coming due in the following two years, according to the credit rater.
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