Walgreens Junk Bond

Walgreens Boots Alliance Inc. (NASDAQ:WBA) has initiated its first high-yield bond sale, aiming to raise $600 million to manage a maturing note due in November. The bond sale marks a significant shift for the drugstore giant, which is now issuing five-year bonds that are callable in 2026. These bonds are expected to yield in the mid-to-high 8% range, a noticeable increase from the lower yields Walgreens enjoyed during its time as an investment-grade company.

JPMorgan Chase Leads the Transaction

JPMorgan Chase & Co. (NYSE:JPM) is leading the bond sale, with initial pricing expected to be finalized today. The bank had previously gauged investor interest for a note sale that could yield around 7.5%. The proceeds from this bond issuance, along with cash reserves, will be used to address Walgreens’ 3.8% note due on November 18, which has an outstanding balance of $1.16 billion. The move comes after Walgreens filed a shelf offering with regulators earlier on Thursday.

Credit Ratings and Future Debt Obligations

Walgreens junk bond sales come at a challenging time for Walgreens, as both S&P Global Ratings and Moody’s Ratings have downgraded the company since December, citing ongoing retail struggles. In its July downgrade, S&P highlighted Walgreens’ refinancing needs as a “key risk.” The company faces $1.4 billion in debt maturities starting September 1, with an additional $4.6 billion in bonds and loans due over the following two years.

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