Investment management firm BlackRock Inc. (BLK) plans to sell $2.5 billion of bonds in three parts, according to media reports on Monday. The company reportedly intends to sell three-year notes in addition to the five-year and ten-year debt that were initially planned. This will be the company's first bond deal in two years.
In a filing with the U.S Securities and Exchange Commission, BlackRock said net proceeds of the offering will be used to repay borrowings under its commercial paper program. However, the filing did not specify the size of the deal or the maturities being offered.
As of December 4, 2009, BlackRock had about $3 billion in borrowings outstanding under its commercial paper program, which had a weighted average interest rate of 0.22% and a weighted maturity of 37 days. The company also had outstanding $700 million and $3.2 billion of unsecured long-term and short-term indebtedness, respectively, in addition to $243 million in convertible debentures.
According to media reports, the sale includes $500 million of three-year notes priced to yield 110 basis points more than similar-maturity Treasuries, $1 billion of five-year debt yielding 135 basis points more than benchmarks, and $1 billion of 10-year notes yielding a spread of 160 basis points over Treasuries. A basis point is 0.01 percentage point.
The notes are reportedly expected to price on Thursday. Barclays Capital, Citigroup, Credit Suisse and Bank of America Merrill Lynch are leading the sale.
In early December, BlackRock said it has completed its merger with Barclays Global Investors, which also includes the platform of iShares exchange traded funds. The merger will create a new combined firm operating under the BlackRock name, while retaining the iShares brand.
In mid-October, BlackRock reported a 46% rise in profit for the third quarter, reflecting a one-time tax related benefit, lower expenses and increased risk appetite among clients, even as revenues dropped 13% stemming from a drop in fees associated with a market driven reduction in average assets under management.
Net income attributable to BlackRock for the third quarter rose to $317 million or $2.27 per share from $217 million or $1.59 per share in the prior-year quarter. Revenue for the quarter declined to $1.14 billion from $1.31 billion a year ago.
BLK closed Monday's regular trading session at $221.53, down $1.96 or 0.88% on a volume of 0.55 million shares.
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