NYSE Raises $850M from Note Sale - Analyst Blog
03 Ottobre 2012 - 6:49PM
Zacks
On Monday, NYSE Euronext Inc. (NYX) vended of
senior notes worth $850 million that were underwritten through a
public offering. This marks the company’s first dollar-denominated
note sale after about four years.
Accordingly, NYSE issued the 5-year senior notes at $99.669 with
a coupon rate of 2.0%. These are scheduled to mature on October 5,
2017. Additionally, the $850 million notes bear a yield of 2.07%
and a spread of 145 basis points (bps) above the Treasury. The
notes are wholly callable at 25 bps, while interest is payable
semi-annually, the first payment being on April 5, 2013.
NYSE appointed BofA Merrill Lynch of Bank of America
Corp. (BAC), Morgan Stanley (MS),
JP Morgan Chase & Co. (JPM) and
Citigroup Inc. (C) as the joint book-running
managers for the sale. The above-mentioned notes are rated “A3” and
“A+” by Moody’s Investor Service of Moody’s Corp.
(MCO) and Standards & Poor’s (S&P), respectively.
NYSE expects to utilize the net proceeds from the notes sale to
redeem $750 million of notes that are due to mature in June 2013.
These notes carry an interest of 4.8%. Moreover, the company plans
to use the remaining takings to buyback some or all of notes worth
€250 million ($323 million). These €250 million of notes are part
of the €1.0 billion notes that bear an interest of 5.375% and are
slated to mature in 2015.Some of the earnings from the notes are
also expected to be used for general business operations.
However, S&P has been wary of NYSE’s liquidity of late.
While the rating agency affirmed the company’s counterparty credit
rating at “A+/A-1,” senior unsecured debt at “A+” and its
commercial paper at “A-1,” its outlook was revised to negative from
stable in August 2012.
The revised outlook elucidates on the rating agency’s
creditability, since the company’s cash and operating cash flow
appear under pressure and does not look impressive. Moreover, as a
result of higher capital expenditure and debt, NYSE’s
debt-to-EBITDA ratio also deteriorated to 2.1x from 1.6x recorded
at the end of 2011, which was the lowest level since the inception
of this organisation in April 2007.
Nevertheless, the senior unsecured revolving credit facility
worth $1 billion that the company entered during the second-quarter
2012, scheduled to mature on June 15, 2015, along with the latest
notes sale is expected to provide cushion to NYSE’s liquidity
crunch. Yet, higher borrowing costs could again weigh on the
margins.
NYSE is scheduled to release its third-quarter 2012 earnings
before the bell on November 6, 2012. The Zacks Consensus Estimate
pegs NYSE’s earnings for the third quarter at 46 cents per share,
which is about 35% lower than the year-ago quarter. For 2012,
earnings are expected to dip about 21% over 2011 to $1.95 per
share. However, the stock is expected to rebound in 2013.
NYSE currently retains a Zacks #5 Rank, which translates into a
short-term Strong Sell rating and indicates a strong downward
pressure on the stock in the near term. The long-term
recommendation also remains Underperform.
BANK OF AMER CP (BAC): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis Report
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