HG bonds: Amgen places $4B offering as buybacks ramp up; terms

Amgen Inc. today completed a $4 billion offering of senior notes across issues due 2029, 2032, 2052 and 2062.

An amount equal to the net proceeds of the 2029 notes will be used to finance new or existing eligible green projects, which include green buildings, eco-efficient operations and processes, eco-efficient products, renewable energy, and clean transportation. Proceeds from the 2032, 2052 and 2062 notes will be used for general corporate purposes, including but not limited to the repurchase of shares of common stock pursuant of its stock repurchase program, according to regulatory filings.

Of note, on Feb. 8, Amgen announced that it plans to buy back $6 billion of its common stock during the first quarter. The company bought back an equivalent of $1.5 billion of common stock during the fourth quarter of 2021 and repurchased $5 billion of common stock during 2021, or roughly in line with its average amount of buybacks over the last three years, according to S&P Global Ratings.

Earlier today, the rating agencies assigned respective A-/Baa1/BBB+ to the new bond placement. The outlooks are stable all around.

Ratings today affirmed its A- corporate profile while noting that the $6 billion buyback scheme is a credit negative and reduces headroom in the ratings. "However, we expect the company to build capacity as sales of newer products grow and it generates free cash flow," the agency added.

Moody's today noted that the company operates with "moderate" financial leverage, including gross debt/EBITDA "typically sustained around 3.0x to 3.25x."

Fitch today concurred that the share repurchases limit headroom for "additional leveraging transactions in the near term."

Amgen last tapped the market in August 2021 when it placed a $5 billion, four-part offering, the proceeds of which it earmarked to repay existing debt.

Terms: