Philip Morris International Inc. (NYSE:PM) announced on Friday the issuance of $3 billion in senior unsecured notes, in a move to bolster its general funds for corporate purposes. The tobacco giant, known for its cigarette brands, stated the proceeds might be used for general corporate activities, including the potential repayment of existing borrowings under its term loan facility, repayment of outstanding commercial paper, or to meet working capital requirements.
The offering, dated October 30, 2024, consists of four tranches with varying maturities: $750 million of 4.375% notes due 2027, $750 million of 4.625% notes due 2029, $750 million of 4.750% notes due 2031, and $750 million of 4.900% notes due 2034. Interest on these notes is payable semiannually, with the first payment commencing on May 1, 2025.
The notes, which were sold pursuant to a Terms Agreement with several underwriters led by BBVA (BME:BBVA) Securities Inc. and BofA Securities, Inc., will rank equally with Philip Morris' existing and future senior unsecured indebtedness. The company may redeem the notes at any time at the applicable redemption prices, plus accrued and unpaid interest. Furthermore, the notes include certain covenants that limit Philip Morris' ability to incur debt secured by liens and engage in sale/leaseback transactions, with significant exceptions.
Philip Morris' decision to issue new debt comes amid a period of low interest rates, providing an opportune moment for corporations to access capital. The offering was made under a Prospectus Supplement, dated October 30, 2024, to the company's registration statement.
InvestingPro Insights
Philip Morris International's recent $3 billion debt issuance aligns with its strong financial position and market performance. According to InvestingPro data, the company boasts a substantial market capitalization of $203.39 billion and has demonstrated impressive revenue growth of 8.58% over the last twelve months as of Q3 2024. This growth trajectory supports the company's decision to raise additional capital for general corporate purposes.
InvestingPro Tips highlight that Philip Morris has raised its dividend for 16 consecutive years, reflecting a commitment to shareholder returns. This is particularly noteworthy given the company's current dividend yield of 4.07%, which may attract income-focused investors. Additionally, Philip Morris operates with a moderate level of debt, suggesting that this new issuance is unlikely to significantly impact its overall financial health.
The company's strong market position is further evidenced by its 56.98% price total return over the past year, indicating robust investor confidence. For readers interested in a more comprehensive analysis, InvestingPro offers 14 additional tips that could provide deeper insights into Philip Morris International's financial outlook and market position.
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