Borrowing costs went down significantly in the first quarter this year, marking a record low, and in turn, facilitating the companies to obtain easy financing at compelling terms. Besides, corporate bonds were in huge demand as U.S. treasuries were yielding low driving investors toward the bonds issued by the fundamentally sound companies.
Debt offers of big companies witnessed oversubscription providing the corporations the option to price their offerings at lower rates. Therefore, several companies came up with debt offerings to generate interest expense savings by refinancing their outstanding borrowings.
Such moves are quite obvious as the companies cannot bear to pay higher rates for long and that too in a time when debts can be issued with lower coupon rates.
Now, with the start of the second quarter, Lowe’s Companies Inc. (LOW), the world’s second largest home improvement retailer, announced the sale of Notes worth $2 billion.
The company distributed the issuance into three parts, including $500 million Notes carrying a coupon of 1.625% with a maturity of 5 years, $750 million notes carrying a coupon of 3.12% with a maturity of 10 years, and $750 million notes carrying a coupon of 4.65% with a maturity of 30 years.
As per the company, the net proceeds from the issuance will be used for general corporate purposes, including share buybacks, acquisitions and to bring in financial flexibility.
Lowe’s is leaving no stone unturned to generate higher sales while attaining operating efficiencies, be it through acquisitions or through technological advancements, all remain on the cards.
(Read our full coverage on this: Lowe’s Aims Growth)
In the home improvement retailing business, Lowe’s competes with The Home Depot Inc. (HD), The Sherwin-Williams Company (SHW) and other home supply retailers on attributes such as location, price and quality of merchandise, in-stock consistency, merchandise assortments, and customer service.
Currently, Lowe’s has a Zacks #3 Rank, implying a short-term ‘Hold’ rating. Besides, we retain our long-term ‘Neutral’ recommendation on the stock.
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