On Tuesday, Coca-Cola Consolidated Inc. garnered $1.2 billion through the issuance of blue-chip bonds aimed at facilitating a stock repurchase.
The Coke bottler structured the bond sale in two segments, as revealed by a source familiar with the transaction. The most significant portion, a $500 million 10-year bond, was settled at a yield of 1.05 percentage points above Treasuries, which initially had discussions around 1.3 percentage points, according to the insider, who wished to remain anonymous due to unauthorized disclosure.
The bond sale was announced following the company’s declaration on the previous day that it would repurchase up to $2 billion of its own shares. Additionally, Coca-Cola Consolidated plans to acquire more shares from Coca-Cola Co., potentially raising the total buyback amount to $3.1 billion. The proceeds from the bond issue are intended to support these equity transactions, with any surplus funds being allocated to general corporate purposes.
This marks the first public offering in the investment-grade dollar debt market by the company since 2015, as per Bloomberg’s records.
J. Frank Harrison III, the chairman and CEO, expressed, “We see this as a perfect opportunity to utilize our strong balance sheet by incurring a sensible level of debt to reward our shareholders and enhance long-term value.”
This year, other corporations, including Cigna Group and Lockheed Martin Corp., have also raised funds through debt to finance share buybacks. With falling yields since October, many firms are considering increasing their debt levels to improve shareholder returns.
The bond offering was managed by Bank of America Corp., PNC Financial Services Group, Truist Securities Inc., and Wells Fargo & Co. It is anticipated to receive a Baa1 rating from Moody’s Ratings and a BBB+ from S&P Global Ratings. Earlier in the month, S&P adjusted the outlook for Coca-Cola Consolidated to negative from stable, indicating a potential downgrade by the first half of fiscal 2026 if the company fails to decrease its leverage.
On that Tuesday, Coca-Cola Consolidated was among nine entities that issued debt in the high-grade bond market.
