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Special Dividends, Refinancing, and Acquisition: Last Week in Bonds

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New issues in the U.S. dollar corporate bond market came back strong following the Thanksgiving weekend with more than $45 billion of new paper last week. Companies headquartered outside the U.S. continued to be significant players with nearly $14 billion of the total. A few of the deals are summarized below.

Chevron (NYSE: CVX  ) led the borrowing with $4 billion spread across five- and 10-year notes. The new money will refinance some commercial paper and redeem some higher-coupon notes. The deal saves Chevron about $12 million per year in interest expense.

It's a giant cash-back sale for Costco (NASDAQ: COST  ) shareholders. The retailer is borrowing $3.5 billion in three-, five-, and seven-year tranches to finance a $3 billion special dividend, with the remainder of the new money going to "general corporate purposes, including to purchase common stock pursuant to our existing share repurchase authorization, subject to market conditions."

Sticking with the cash-to-shareholders theme, Murphy Oil (NYSE: MUR  ) pumped out $1.5 billion across five-, 10-, and 30-year issues. The money will fund a $2.50 per-share special dividend and share buybacks.

Minnie, Mickey, and friends visited the bond market and sold $3 billion total in three-, five-, 10-, and 30-year notes. The Use of Proceeds statement from Disney (NYSE: DIS  ) SEC filing included debt repayment, share buybacks, dividend payments, acquisitions, and general corporate purposes. Disney also announced a 25% dividend hike last week, with the new dividend payable on Dec. 28.

In addition to books, Kindles, and other merchandise, Amazon (NASDAQ: AMZN  ) sold $3 billion of new debt in three- , five- , and 10-year tranches. For $3 billion, shareholders should expect that more than "net proceeds from the sale of the notes will be used for general corporate purposes."

Clean Harbors (NYSE: CLH  ) cleaned up $600 million in fresh cash in a nine-year debt offering. The money will help finance its Safety-Kleen acquisition. Clean Harbors also announced a 6 million-share secondary offering last week that will also go toward the acquisition.

There has been quite a bit of news on companies moving dividend payments forward to December or making special dividend payments in 2012 to avoid potential higher dividend taxes next year. Combine prospects for higher taxes with very low borrowing costs, and I expect we'll see more companies follow Costco and Murphy by borrowing to pay special dividends. Fellow Fool Mark Morelli has more on year-end dividend moves driven by tax policy at The Motley Fool Blog Network.

Costco Wholesale's low prices haven't just benefited customers: Shareholders have walloped the market, returning 11,000% over the past two decades. However, with prices near all-time highs, is the ride over for Costco investors? To answer that, we've compiled a premium research report with in-depth analysis on whether Costco is a buy right now and why. Simply click here now to gain instant access to this valuable investor's resource.

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10/28/2016 4:00 PM
AMZN $776.32 Down -42.04 -5.14% CAPS Rating: ****
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COST $149.76 Down -1.10 -0.73%
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CVX $103.82 Up +3.90 +3.90%
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