Walgreens Junk Bond

Walgreens Boots Alliance Inc. (NASDAQ:WBA) has launched its first high-yield bond offering, aiming to raise $600 million to manage a maturing note due in November. This bond sale marks a significant change for the drugstore giant, as it is issuing five-year bonds callable in 2026. These bonds are projected to yield in the mid-to-high 8% range, a notable increase compared to the lower yields Walgreens enjoyed during its time as an investment-grade company.

JPMorgan Chase Leads the Transaction

JPMorgan Chase & Co. (NYSE:JPM) is leading the bond sale, with initial pricing expected to be finalized today. The bank had previously assessed investor interest for a note sale that could yield around 7.5%. The proceeds from this bond issuance, along with cash reserves, will be used to address Walgreens’ 3.8% note due on November 18, which has an outstanding balance of $1.16 billion. This move comes after Walgreens filed a shelf offering with regulators earlier on Thursday.

Credit Ratings and Future Debt Obligations

Walgreens’ junk bond sale occurs at a challenging time for the company, as both S&P Global Ratings and Moody’s Ratings have downgraded the company since December, citing ongoing retail struggles. In its July downgrade, S&P highlighted Walgreens’ refinancing needs as a “key risk.” The company faces $1.4 billion in debt maturities starting September 1, with an additional $4.6 billion in bonds and loans due over the following two years.