CNH Industrial Completes 7-year Note Offering Worth Euro 700M
CNH Industrial N.V. (CNHI), a premier global manufacturer in the capital goods sector, concluded its Euro-denominated benchmark note offering of €700 million in aggregate principal amount. The issuing entity is CNH Industrial Finance Europe S.A., a wholly-owned subsidiary of CNH Industrial N.V.
The offering was announced earlier this week and was issued at a price of 99.22% of the principal amount. The notes offer a coupon rate of 2.875% and are scheduled to mature in Sep 2021.
The company has applied to list the notes on the Irish Stock Exchange. The issuance is a part of the Global Medium Term Note Programme guaranteed by CNH Industrial N.V.
The capital goods leader regularly issues debt. It completed a $500 million private note offering in July, and issued asset-backed securities worth nearly $1 billion in the preceding month as well.
Generally, the proceeds from such issues are employed to meet the company’s ongoing working capital needs and for general corporate purposes, including the purchase of receivables or other assets. The proceeds may also be used for debt repayment of CNH Industrial Capital LLC as and when it becomes due.
CNH Industrial had $3.7 billion of net industrial debt on its balance sheet as of Jun 30, 2014. In its second-quarter 2014 results, the company reported net interest expense of $158 million, up 11% from the prior-year quarter. The current note issuance will increase the company’s debt servicing costs even further.
Presently, the company is rated below investment grade, with a Ba1 rating assigned by leading credit rating agency Moody's Investors Service.
CNH Industrial presently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the auto–tires–trucks sector that look promising include Nissan Motor Co. Ltd. (NSANY), Tesla Motors, Inc. (TSLA) and Toyota Motor Corp. (TM), each sporting a Zacks Rank #1 (Strong Buy).
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