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Stanley Black & Decker Investor Update: Debt Pricing

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SWK prices its notes

On October 30, Stanley Black & Decker (SWK) announced that it had priced its notes. SWK is issuing $1 billion in two tranches:

  • $500 million aggregate principal amount carrying a coupon rate of 4.25% due on 2028
  • $500 million aggregate principal amount carrying a coupon rate of 4.85% notes due 2048

The issue is expected to be closed on November 6, 2018. With this move, SWK expects to receive net proceeds of $989.4 million after accounting for underwriters, discounts, commissions, and other expenses. SWK intends to use the net proceeds for early redemption of its debt and also for other general corporate purposes. It remains to be seen if SWK repays debt carrying higher coupon rates, which could reduce SWK’s interest expense and could boost its net income.

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Stock price update

SWK stock bounced back sharply after falling due to its third-quarter earnings. The stock gained 12.7% and closed at $124.24 for the week ending November 2. Despite strong gains, SWK traded 9.8% below the 100-day moving average price of $137.76, indicating weakness in the stock. On a year-to-date basis, SWK is still down 26.8%. SWK’s peers Deere (DE), Illinois Tool Works (ITW), and Caterpillar (CAT) have fallen 9.5%, 21.7%, and 20.2%, respectively.

Stanley Black & Decker has a relative strength index of 48, which indicates that the stock isn’t overbought or oversold. Investors can hold Stanley Black & Decker indirectly by investing in the Invesco S&P 500 Equal Weight Industrials ETF (RGI), which has invested 1.8% of its portfolio in Stanley Black & Decker as of November 2.

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