HG bonds: Home Depot launches $3B of M&A-driven notes firm to guidance

Home Depot Inc. has launched a $3 billion public offering of senior notes in three parts, as the company seeks to replenish cash used for its recently completed $8 billion acquisition of HD Supply, according to participants in the offering. Terms were set at the firm end of guidance ranges, at T+35 for $500 million of seven-year notes due March 15, 2028, T+52 for $1.25 billion of 10-year notes due March 15, 2031, and T+77 for $1.25 billion of 30-year bonds due March 15, 2051. Active bookrunners are J.P. Morgan, BofA Securities, Deutsche Bank and Morgan Stanley. The issues are subject to make-whole call provisions, standard tenor-specific par calls prior to maturity and change-of-control put provisions for investors.

Home Depot's A/A2/A ratings profile reflects stable outlooks on all sides.

The big box retailer last placed a benchmark bond offering late in March 2020, when it issued $5 billion of notes, including at T+190 for 2.5% seven-year notes, T+195 for both a 2.7% 10-year issue and a 3.3% 20-year issue, and at T+200 for 3.35% 30-year bonds.

Its borrowing-cost proposition has improved since then. The launch levels for today's offering point the issues to reoffer yields just below 1% for the seven-year issue, in the 1.43% area for the 10-year tranche, and near 2.42% for the 30-year bonds. For reference, the launch levels are tighter relative to early whispers this morning, which circulated in the areas of T+60 for the 2028 notes, T+75 for the 2031 issue and T+100 for the 2051 bonds.