CVS Health Corp (NYSE:). is in discussions with investors regarding a potential bond sale, while simultaneously announcing its intention to repurchase approximately $3 billion of its outstanding notes, according to Bloomberg News.
The company has enlisted the services of Barclays (LON:) Plc, Citigroup Inc (NYSE:)., and Goldman Sachs Group Inc (NYSE:). to facilitate calls with investors on Monday, with the prospect of issuing junior subordinated debt following these discussions.
In a concurrent move, CVS has launched a tender offer targeting notes from both CVS and its Aetna insurance subsidiary. The repurchase includes roughly $950 million in notes maturing in March 2025 and an additional $2 billion in notes with longer maturities. Barclays and Mizuho (NYSE:) Financial Group Inc. are managing this tender offer.
The strategy is part of CVS’s broader efforts to address its significant debt, which has grown following a series of acquisitions, including the approximately $70 billion purchase of Aetna in 2018. These moves have led to increased debt and relatively unchanged earnings.
As a result, Moody’s Ratings is considering a downgrade of CVS’s credit rating by one notch in the upcoming months, which could place the company just above high-yield status. Similarly, S&P Global Ratings has indicated that CVS could be downgraded to the brink of high-grade within the next two years.
Despite these potential downgrades, CVS’s decision to repurchase debt is seen as a sign of the management’s confidence in the company’s liquidity and its capacity to refinance its obligations.
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