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HG bonds: Becton Dickinson targets 2021 maturities with new 2031 notes; terms

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HG bonds: Becton Dickinson targets 2021 maturities with new 2031 notes; terms

Becton Dickinson and Co. today completed a $1 billion offering, at par pricing, of 1.957% 10-year notes due Feb. 11, 2031, at T+80.

Proceeds will be used, together with cash on hand, to repay the entire $1 billion of 3.125% notes due in November of this year, according to regulatory filings. The rating agencies noted that the company may also seek to repay the outstanding €600 million of its debt due in June.

On Feb. 4, the company released better-than-expected results of $3.35 per share on a GAAP basis for the previous quarter, versus a consensus of $2.38 per share. Revenue of $5.315 billion bested expectations for $4.87 billion, according to S&P Capital IQ.

Becton Dickinson last tapped the market in May 2020, when it placed a $1.5 billion, two-part offering at par pricing, across $750 million each of 2.823% 10-year notes due May 20, 2030, at T+210, and 3.794% 30-year notes May 20, 2050, at T+235. For reference, the 2030 issue traded late last week at a G-spread of 83 basis points, according to MarketAxess.

Franklin Lakes, N.J.–based Becton Dickinson develops, manufactures and sells medical supplies, devices, laboratory equipment and diagnostic products worldwide.

Earlier today, the rating agencies assigned respective BBB/Baa3/BBB– ratings to the new offering. The outlooks are stable on all sides.

S&P Global Ratings noted that today's bond placement is leverage neutral at a time when the company is seeing strong demand for its COVID-19 diagnostics and vaccination products. “"Also, despite the recent resurgence in COVID-19 cases, medical procedure volumes have remained resilient, leading to steady demand for Becton Dickinson's critical health care products," allowing the company to show improved performance across all three of its major segments (BD Medical, BD Interventional and BD Life Sciences) and to raise its fiscal 2021 guidance, the agency stated.

"We project Becton Dickinson's net adjusted leverage declines to roughly 3.2x in 2021, comfortably below our 3.75x downside trigger," Ratings said today.

Moody's said its Baa3 rating is supported by the company's significant scale and balanced financial policies, though ratings are constrained by "its history of significant debt financed acquisitions" and uncertainty around litigation cash outflows.

Fitch noted that the new bond transaction will extend the company's maturity schedule, which is manageable and laddered over the coming years.

Terms:

Issuer Becton Dickinson & Co.
Ratings BBB/Baa3/BBB–
Amount $1 billion
Issue SEC-registered senior notes
Coupon 1.957%
Price 100
Yield 1.957%
Spread T+80
Maturity Feb. 11, 2031
Call make-whole T+15
Trade (date) Feb. 8, 2021
Settle Feb. 11, 2021
Bookrunners BARC/C/JPM/MS
Price talk IPT: T+105 area
Notes Proceeds will be used to repay 2021 maturities.