Shares in retail giant Walmart (WMT) slipped today as it said it was selling a new tranche of investment-grade bonds to help it potentially refinance its debt.
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Floating Rate Notes
It said it was launching the dollar-denominated floating notes in four parts. A Floating Rate Note is a bond with a variable coupon rate that resets periodically based on a benchmark interest rate, such as the Secured Overnight Financing Rate (SOFR) or the federal funds rate, plus a fixed spread.
Walmart said that the floating rate notes would bear interest at a floating rate, reset quarterly, equal to Compounded SOFR.
Bloomberg reported that the longest portion of the offering, a 10-year security, may yield 0.7% more than treasuries. But these figures could not be verified in the Walmart filing today.
It did say that notes will be issued in minimum denominations of $2,000 and multiples of $1,000 in excess thereof.
General Corporate Purposes
It plans to use the proceeds from the sale for general corporate purposes, “which may include repayment, refinancing or replacement of maturing debt, among other uses.”
Walmart said that the Bank of New York Mellon Trust Company, N.A. will act as the calculation agent for determining Compounded SOFR for each interest payment period with respect to the floating rate notes.
Companies issue bonds to raise money for a variety of purposes such as investing in equipment, refinancing debt or M&A. According to TipRanks figures Walmart has a total debt of around $67 billion.
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