(Bloomberg) – CVS Health Corp. sells $5 billion worth of bonds less than a week after stocks plunged the most since 2009 following a downbeat quarterly report and lowered 2024 outlook, joining a string of companies that have jumped into the market of debt after the results season.
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The pharmacy heavyweight and health insurer offers notes in five parts, according to a person with knowledge of the matter. The longest part of the deal, a 30-year security, will yield 1.5 percentage points above that of the Treasury, after initial discussions of 1.75 percentage points, said the person, who asked not to be identified because the details are confidential.
Proceeds can be used for a variety of general corporate purposes, including capital expenditures and repayment of notes maturing this year.
A CVS representative did not respond to a request for comment.
CVS’s outlook and latest results have been affected by rising medical costs in the Medicare insurance segment. Other insurers that sell Medicare Advantage plans, private versions of the U.S. government’s health program for seniors, face the same situation, as more seniors seek treatments they’ve been putting off in due to the pandemic.
That’s not CVS’s only problem, as retail pharmacies in general have been under pressure and its health services business, which includes pharmacy benefits, missed revenue estimates last quarter.
This week, a flood of companies hit the U.S. debt markets, including the investment grade segment that CVS issues. Spreads there are at their tightest relative to government debt in two and a half years and more investment-grade issuers have entered the primary dollar bond market in the past two days than at any other time in 2024.
Barclays Plc, Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co are handling the bond sale, the source said.
–With help from Brian Smith.
(Updates title, first and second paragraphs with launch details, adds CVS response to fourth paragraph)
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