Nebraska based investment brokerage firm – TD Ameritrade Holding Corporation AMTD priced senior notes worth $750 million. The senior notes, which are set to mature on Apr 1, 2022, will carry an interest of 2.950%. Awaiting certain customary closing conditions, the offering is anticipated to close on Mar 9, 2015.
TD Ameritrade will make interest payment on the senior notes on a semi-annual basis. Such payments will be made on Apr 1 and Oct 1 of each year, starting Oct 1, 2015.
Joint book-running managers for the transaction include Barclays Capital Inc., a subsidiary of Barclays PLC BCS, TD Securities (USA) LLC, U.S. Bancorp Investments, Inc., a unit of U.S. Bancorp USB and Wells Fargo Securities, LLC, an arm of Wells Fargo & Co. WFC.
The company anticipates utilizing the net proceeds from the offering in a number of purposes including liquidity for operational contingencies. However, we believe the senior notes offering might lead to a further increase in interest expenses, thereby affecting overall profitability.
Notably, for first-quarter fiscal 2015 (ended Dec 2014), interest expenses increased 50% sequentially to $9 million. Long-term debt stood at $1.11 billion, up from $1.10 billion in the prior quarter.
Innovations in online trading, long-term investment in products and services, delivery of advanced customer service, and creative marketing and sales are some of TD Ameritrade’s key strategies for boosting its trading and investing business.
Amid a volatile operating environment, the company witnessed a continuous rise in both organic client assets and trading volumes, which bode well, going forward. However, we remain cautious regarding a continuous rise in expenses, a low interest rate environment and stringent regulations, which may weigh on the company’s financials in the upcoming quarters.
TD Ameritrade currently holds a Zacks Rank #3 (Hold).
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