RTX Corp. (NYSE:RTX), an aerospace and defense manufacturer, is entering the U.S. investment-grade bond market to help repay a short-term loan that will cover the cost of its $10 billion share buyback program. The company is planning to issue bonds in up to five parts, including a 30-year fixed-rate security. The yield on the longest portion of the offering is expected to be 1.875 percentage points above Treasuries. RTX had initially announced a $10 billion share buyback program that was financed with a short-term bridge loan, which is now set to be refinanced with longer-term debt, such as bonds or loans.
The proceeds from RTX’s bond offering will be used to repay a portion of the loans under the bridge credit agreement. Both Moody’s Investors Service and S&P Global Ratings had reduced their outlook on RTX’s rating to negative from stable due to its increased debt load following the share buyback announcement. RTX has been actively reducing its share count rather than its financial leverage.
RTX is among at least 11 issuers in the U.S. high-grade bond market on this particular day. Blue-chip firms are expected to borrow as much as $40 billion during the week. The favorable issuance backdrop is supported by stocks holding gains after a strong rally the previous week, and average high-grade risk premiums remaining unchanged at 125 basis points. The bond sale is managed by Citigroup Inc., Goldman Sachs Group Inc., Bank of America Corp., JPMorgan Chase & Co., and Morgan Stanley.
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Author Faith Yakubu 
