Starbucks Corp. today completed a $1.5 billion offering of senior notes in two parts, across $500 million of two-year (non-call one) floating-rate notes at 42 basis points over the secured overnight financing rate and $1 billion of 3% 10-year notes at T+110.

The company intends to use the net proceeds for general corporate purposes, which may include the repayment of outstanding indebtedness, including outstanding borrowings under its commercial paper program, the repurchase of common stock under its ongoing share repurchase program, business expansion, payment of cash dividends on its common stock, or the financing of possible acquisitions, according to regulatory filings.

S&P Global Ratings today rated the new issue at BBB+ under a view that the transaction would be "roughly leverage neutral," as a majority of the proceeds will address $1 billion of existing notes maturing in the current fiscal year. Moody's and Fitch rated the proposed offering at Baa1 and BBB, respectively, and Fitch today affirmed the same grade for its issuer default rating. The ratings outlooks are stable on all sides.

Starbucks' debt-maturity profile includes $500 million each of 1.30% senior notes due May 2022 and 2.70% senior notes due June 2022. Its subsequent maturity is a $1 billion issue of 3.10% senior notes due March 2023, followed by $750 million of 3.85% senior notes due October 2023.

Meanwhile, the company accelerated its shareholder returns heading into 2022. Starbucks repurchased more than $3.6 billion of its shares for the 12 months to Jan. 2, 2022, up from $710 million over the comparable last-12-months period a year earlier. It completed nearly all of those repurchases over the three months to Jan. 2, which represents its second-highest quarterly buyback amount on record, trailing only the approximately $5.2 billion it bought back for the three months to Dec. 30, 2018, according to S&P Global Market Intelligence.

The new offering marks Starbucks' first tap of the bond markets since May 4, 2020, when it priced $3 billion of notes, primarily for refinancing purposes. That pricing was across $500 million of 1.3% two-year notes due May 7, 2022, at T+115 and $1.25 billion each of long 2.55% 10-year notes due Nov. 15, 2030, at T+195 and long 3.5% 30-year bonds due Nov. 15, 2050, at T+225.

The 3.50% 2050 issue changed hands this morning at T+144-145, or at a weighted average at 3.68%, according to MarketAxess.

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