CVS Health Plans Bond Sale and $3 Billion Debt Buyback - Report

According to Bloomberg News, CVS Health Corp. announced that it is in discussions with investors regarding a potential bond sale while also planning to buy back approximately $3 billion of its existing bonds. The company is utilizing the services of Barclays Plc, Citigroup, and Goldman Sachs to facilitate discussions with investors on Monday. Following these conversations, there is a possibility of issuing secondary subordinated debt.

Simultaneously, CVS has launched a buyback offer targeting both its own bonds and those of its insurance subsidiary, Aetna. The buyback covers approximately $950 million of bonds maturing in March 2025, along with an additional $2 billion of longer-term bonds. This buyback offer is being managed by Barclays and Mizuho Financial Group Inc.

This strategy is part of CVS's efforts to address its significant debt load, which has increased following a series of acquisitions, including the nearly $70 billion acquisition of Aetna in 2018. These actions have led to rising debts and relatively unchanged earnings.

As a result, Moody's Ratings is considering a one-notch downgrade of CVS's credit rating in the coming months, which could place the company just above high-yield status. Similarly, S&P Global Ratings indicated that CVS could be downgraded to the border of high-grade status within the next two years.

Despite these potential downgrades, CVS's decision to repurchase debt is seen as a sign of management's confidence in the company's liquidity and capacity to refinance its obligations.