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DowDuPont to Raise $12.7 Billion in Debt

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DowDuPont prices its notes

On November 13, DowDuPont (DWDP) announced that it intends to raise $12.7 billion in debt through senior notes. On November 14, DowDuPont priced its notes. The offer is expected to be completed by November 28. Below are the details of the senior notes that will be issued:

  • $1.5 billion carrying coupon rate of ~3.76% due in 2020
  • $2.5 billion carrying coupon rate of ~4.20% due in 2023
  • $1.85 billion carrying coupon rate of ~4.5% due in 2025
  • $2.25 billion carrying coupon rate of ~4.73% due in 2028
  • $1.65 billion carrying coupon rate of  ~5.32% due in 2038
  • $2.15 billion carrying coupon rate of ~5.42% due in 2048
  • $500 million floating rate notes due in 2020
  • $300 million floating rate notes due in 2023

DowDuPont intends to use the net proceeds received from the issue to bring down the liabilities of the upcoming spin-off companies Dow and Corteva by ~$2.024 billion and $10.1 billion, respectively. The proceeds will be used to fund up to a $3.0 billion share repurchase. The funds will also be used to pay fees and other expenses related to issuing notes. At the end of the third quarter, DowDuPont’s debt was $35.16 billion.

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DowDuPont’s stock price

DowDuPont’s stock prices gained 0.9% and closed at $59.19 for the week ending November 16. Despite the gain in the stock price, DowDuPont traded 8.3% below the 100-day moving average price of $64.57, which indicates weakness in the stock. DowDuPont has continued to struggle in 2018. On a year-to-date basis, the stock has fallen ~16.9%. DowDuPont’s 14-day relative strength index of 53 indicates that the stock isn’t overbought or oversold.

Investors could hold DowDuPont indirectly by investing in the Materials Select Sector SPDR Fund (XLB). XLB has invested 20.6% of its portfolio in DowDuPont. XLB also provides exposure to Linde (LIN), Air Products and Chemicals (APD), and LyondellBasell (LYB) with weights of 15.1%, 4.5%, and 4.2%, respectively, as of November 16.

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