Best Buy Raises $650M with Bond Sale

Best Buy Raises $650M with Bond Sale

Record pace continues in 2020 for corporate debt security offerings.

Richfield-based Best Buy Co. Inc. has raised $650 million through a just-completed bond sale. According to a filing with the U.S. Securities and Exchange Commission, the filing was completed on October 1.

Per an earlier filing, Best Buy plans to use the money for “general corporate purposes.”

Except as otherwise set forth in a prospectus supplement, we intend to use the net proceeds from sales of the debt securities for general corporate purposes, which may include the following: refunding, repurchasing, retiring upon maturity or redeeming existing debt; funding for working capital; capital expenditures; repurchases of our capital stock; and strategic investments and acquisitions.

This year has been a record-breaking year for corporate bond sales. The trend seemed to kick off last spring as companies looked to raise cash in response to the first wave of coronavirus uncertainty. A Wall Street Journal story on October 2 reported that companies had sold a dizzying $1.4 trillion of bonds during the first three quarters of 2020.

Minneapolis-based Xcel Energy Inc. issued $500 million in bonds on September 25.

The newly issued Best Buy bonds are paying an interest rate of 1.95 percent. While that might sound like a thin return to some, it’s better than 10-year Treasury notes which closed at 0.788 percent on Monday.

For investors, bonds offer a steady, predictable return without the volatility of stocks. For companies, it’s a way to secure debt financing at lower rates than they would be charged by a bank.

Twin Cities Business reported earlier this year on Minneapolis-based Target Corp.’s sale of $2.5 billion in bonds to bolster its balance sheet.

On Sept. 23, Target announced cash offers to buy back $1.75 billion of its bond debt. Details provided by the company showed 10 different bond issues with $6.1 billion in outstanding debt.

Other Minnesota companies with notable bond sales this year include Minneapolis-based Ameriprise Financial ($500 million), St. Paul-based Ecolab Inc. ($250 million) and Duluth-based Allete Inc. ($140 million).