Walmart (WMT.US) plans to issue bonds to raise US$6.5 billion: testing the waters of Canadian dollar bonds for the first time, diversifying financing to support expansion expenses

The Zhitong Finance App learned that Walmart (WMT.US) plans to raise about 6.5 billion US dollars by issuing US dollar and Canadian dollar bonds. The world's largest retailer is seeking to diversify funding sources at a time of high expansion expenses.

According to people familiar with the matter, Walmart has initiated the issuance of 5 billion Canadian dollars (about 3.55 billion US dollars) of Canadian dollar bonds, issuing Canadian dollar bonds for the first time. Another person familiar with the matter said that the company has priced the $3 billion bond. Both parties declined to be named because they were not authorized to make public statements.

Earlier, people familiar with the matter said that Walmart hopes to raise at least 5 billion US dollars through the above deal.

According to estimates compiled by the market, analysts estimate that Walmart has increased its investment over the past few years. As part of plans to add new stores, expand e-commerce capabilities, and automate some tasks, next year's expenses are expected to reach a record $29 billion. Additionally, Walmart has about $3.3 billion worth of bonds due next year.

According to people familiar with the matter, the issuance of dollar bonds attracted more than $14 billion in investor demand at its peak. The term ranges from 3 to 10 years, and the 10-year yield is only 0.45 percentage points higher than US Treasury bonds. Walmart usually only issues bonds once a year. It entered the US market in April of this year, raising 4.25 billion US dollars at the time.

With this initial Canadian dollar bond offering, the $950 billion company followed in the footsteps of US tech giants Alphabet and Amazon — two companies that issued Canadian dollar bonds earlier this year to fund investment in artificial intelligence infrastructure.

For US borrowers, issuing Canadian dollar bonds can diversify the currency and investor structure; local investors are snapping up bonds issued by foreign companies to broaden their exposure across industries and issuers.

Analysts Poonam Goya and Sydney Goodman said in a report to customers last week that as inflation and rising gasoline prices squeeze household budgets, Walmart will expand customer coverage and seize more household expenses.

On Monday, four companies, including consumer goods manufacturer Kimberly, issued a total of $10.4 billion in investment-grade dollar bonds.

Banks involved in Walmart's issuance of at least one bond include Bank of America and BNP Paribas, which either declined to comment or did not respond to requests for comment.