According to IFR, a Thomson Reuters service, U.S. Bancorp (USB) sold 10-year senior unsecured notes on Thursday.
U.S. Bancorp sold the 10- year notes worth $1 billion at a coupon rate of 4.125% and an issue price of $99.619. The notes will mature on May 24, 2021, yielding 4.172% with spread of 97 basis points more than Treasuries. The interest will be paid semi-annually, with the first payment due on November 24, 2011.
The new notes has been rated Aa3 by Moody's Investors Service, a credit rating arm of Moody's Corporation (MCO), A- by Fitch and A+ by Standard & Poor's.
The proceeds from the offering are intended to be used for general corporate purposes. Moreover, U.S. Bancorp may use the proceeds for the repayment of its outstanding debt securities.
Deutsche Bank Securities, an arm of Deutsche Bank (DB), MorganStanley (MS) and U.S. Bancorp, will be acting as joint book running managers for the sale.
In March 2011,U.S. Bancorp’s board of directors approved a 150% dividend hike on its common stock. On an annual basis, the dividend will be 50 cents per share or 12.5 cents per share on a quarterly basis.
The board of directors also approved U.S. Bancorp’s share repurchase authorization of 50 million of its outstanding common stock. The new authorization replaced the company’s share repurchase authorization of 20 million shares announced in December 2010. Through December 2011, the shares can be repurchased in the open market or in privately negotiated transactions.
All these actions mark the strength of U.S. Bancorp’s business model, reflecting the company’s commitment to return value to shareholders through its strong cash generation capabilities. The dividend increase and stock buyback followed Fed’s approval after the completion of stress tests for assessing the banks’ financial position.
We believe that U.S. Bancorp’s acquisitions of First Community Bank and Bank of America’s U.S. and European-based securitization trust administration businesses augur well. Yet, regulatory issues and top-line headwinds continue to restrict any robust development within the company.
U.S. Bancorp currently retains its Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Also, considering the fundamentals, we maintain a long-term “Neutral” recommendation on the stock.
DEUTSCHE BK AG (DB): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
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