Lowe’s Plans Debt Sale for Buybacks, Capital Spending

Lowe’s Cos., the second-largest U.S. home-improvement retailer, plans to sell $1 billion of debt that may be spent for working capital, stock buybacks and for capital expenditures.

The bonds will mature in April 2016 and April 2021, the company said in a regulatory filing that didn’t include the size or timing of the sale. The debt is set to be priced as soon as today, according to a person familiar with the transaction.

Lowe’s is marketing bonds two days after reporting third- quarter profit that increased 17 percent as it controlled labor expenses in the housing slump to counter slower-than-forecast sales growth. The Mooresville, North Carolina-based company sold $1 billion of debt on April 12, half of it slated for the same uses as today’s offering, according to data compiled by Bloomberg. Lowe’s fourth-quarter outlook doesn’t include stock buybacks, Chief Financial Officer Robert Hull said on Nov. 15.

The company will “continue to evaluate” payroll expenses and capital expenditures, Hull said on an earnings call.

Lowe’s plans to sell $475 million of 5.5-year notes that may yield 68 basis points more than similar-maturity Treasuries, and $525 million of 10.5-year notes that may pay a spread of 88 basis points, said the person, who declined to be identified because terms aren’t public.

A basis point is 0.01 percentage point.

Lowe’s bought back $600 million of shares in the third quarter and is authorized to spend another $3.4 billion on stock repurchases, Hull said.

In its April sale, Lowe’s issued $500 million of 4.625 percent debt due in April 2020 and $500 million of 5.8 percent bonds maturing in April 2040, Bloomberg data show.

Home Depot Inc. is the world’s largest home-improvement retailer.

To contact the reporter on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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