Charles Schwab today placed $4 billion of senior notes in three parts, across $1.5 billion of 0.75% 3-year fixed-rate notes due March 18, 2024, at T+43; $1.25 billion of same-dated floating-rate notes at 50 basis points over the secured overnight financing rate (Sofr); and $1.25 billion of 2% 7-year notes due March 20, 2028, at T+75. Early whispers this morning started in the T+60 area for the 2024 fixed-rate tranche and the T+90 area for the 2028 issue.
The financial services concern recently completed a $2.25 billion placement of 4% fixed-rate reset non-cumulative perpetual preferred stock, backing general corporate purposes. S&P Global Ratings commented that the offering provides additional liquidity and bolsters Schwab's regulatory capital, as well as providing "incremental stable funding."
The company has earmarked the proceeds of today’s bond placement to redeem or repay $1.2 billion of notes due May 21, 2021, across $600 million each of a floating-rate issue and its 3.250% senior notes, both of which date to issuance in May 2018. The offering otherwise will be used for general corporate purposes, including purchasing securities to augment liquidity and supporting business growth, according to regulatory filings.
Today's offering furthers the company's efforts to term out its maturity profile, after Charles Schwab closed its $26 billion, all-stock acquisition of TD Ameritrade in early October last year. Charles Schwab tapped the bond markets in December 2020 for $2 billion, via its placement of $1.25 billion of 0.90% 5-year notes due March 11, 2026, at T+53, and $750 million of 1.65% 10-year notes due March 11, 2031, at T+75. That offering also was concurrent with a preferred stock sale, totaling $2.5 billion.
For reference, the 1.65% notes due 2031 changed hands this week firm to issuance, in the T+70 area, but at yields well above the coupon rate, near 2.30%. The notes changed hands at spreads as low as T+57 in early January, according to MarketAxess.
The A/A2/A ratings profile for for today’s offering reflects stable outlooks on all sides. Terms:
| Issuer |
Charles Schwab Corp. |
| Ratings |
A/A2/A |
| Amount |
$1.5 billion |
| Issue |
SEC-registered senior notes |
| Coupon |
0.750% |
| Price |
99.950 |
| Yield |
0.767% |
| Spread |
T+43 |
| Maturity |
March 18, 2024 |
| Call |
Make-whole until notes are callable at par
from one month prior to maturity |
| Price talk |
Guidance T+43; IPT T+60 area |
|
|
| Issuer |
Charles Schwab Corp. |
| Ratings |
A/A2/A |
| Amount |
$1.25 billion |
| Issue |
SEC-registered senior notes |
| Coupon |
Sofr+50 |
| Price |
100.000 |
| Maturity |
March 18, 2024 |
| Call |
Par call from one month prior to maturity |
| Price talk |
Guidance Sofr+50 bps; IPT Sofr equivalent of
fixed-rate pricing level |
|
|
| Issuer |
Charles Schwab Corp. |
| Ratings |
A/A2/A |
| Amount |
$1.25 billion |
| Issue |
SEC-registered senior notes |
| Coupon |
2.000% |
| Price |
99.831 |
| Yield |
2.026% |
| Spread |
T+75 |
| Maturity |
March 20, 2028 |
| Call |
Make-whole until notes are callable at par
from two months prior to maturity |
| Trade (date) |
March 16, 2021 |
| Settle |
March 18, 2021 |
| Bookrunners |
BofA/C/CS(B&D)/JPM/MS(act) |
| Price talk |
Guidance T+75; IPT T+90 area |
| Notes |
Proceeds to repay notes due 2021 and for
general corporate purposes and liquidity |
