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Walmart borrows $5 billion in the corporate bond market

Funds to go for ‘general corporate purposes,’ retailer says by Serenah McKay | April 20, 2023 at 5:00 a.m.
A worker organizes items in February inside the Walmart Supercenter in North Bergen, N.J. (AP/Eduardo Munoz Alvarez)

Walmart Inc. is taking on $5 billion in bond debt for "general corporate purposes," the company said in two recent government filings.

The notes, issued in varying amounts, interest rates and maturity dates were first described in a Friday filing with the Securities and Exchange Commission that supplements Walmart's 2020 prospectus. Another document, filed Monday, provided more details about the plan.

A note for $750 million at 4% interest matures in 2026. One for the same amount but paying 3.9% interest matures in 2028. A $500 million note, with a 4% interest rate, is due in 2030.

The first of two notes for $1.5 billion pays an interest rate of 4.1% and matures in 2033. The second one for that amount pays 4.5% and is due in 2053.

Walmart says in the filings that it expects the net proceeds from the sales of the notes to be about $4.97 billion, after underwriting discounts are deducted and transaction expenses are paid.

"We intend to use the net proceeds from the sale of the notes for general corporate purposes, which may include repayment, refinancing or replacement of maturing debt, among other uses," the company said in the documents.

"The aggregate net proceeds from these long-term debt issuances were approximately $5 billion, which were used to pay down and refinance existing debt and for other general corporate purposes," a Walmart spokesman said.

Brian Yarbrough, a retail analyst for financial services firm Edward Jones, said he didn't know why Walmart would take on debt when it has plenty of cash available to fund investments.

"Also, the rates today are much higher than any time over the past 15-plus years, so not sure why the need to take on the debt," Yarbrough said.

The Bentonville-based retailer is several years into building a new headquarters campus that will include amenities such as fitness and childcare centers and a hotel, on about 350 acres. Walmart so far hasn't revealed the cost of the project.

Also, company executives said recently that they plan to invest in even more automation at their stores and warehouses in the next few years.

Doug McMillon, Walmart's chief executive, said earlier this month that by February 2026, about 65% of Walmart stores and about 55% of its fulfillment center warehouses will be largely automated.

Walmart is also investing in a "next-generation" supply chain that will use data, software and robotics to increase speed, accuracy and productivity, McMillon said.

The notes' underwriters are Citigroup Global Markets; BNP Paribas Securities Corp.; HSBC Securities; J.P. Morgan Securities; Mizuho Securities USA; and Morgan Stanley & Co.

Walmart shares rose 16 cents to close Wednesday at $150.01. The shares have traded between $117.27 and $160.77 in the past 52 weeks.

Print Headline: Walmart taking on $5B bond debt


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