Back to top

Analyst Blog

On Wednesday, Northern Trust Corporation (NTRS - Analyst Report) announced that it has priced its $500 million total principal amount of unsecured senior notes due in 2021.

Northern Trust sold the notes worth $500 million at a coupon rate of 3.375% and an issue price of $99.563. The notes will mature on August 23, 2021, yielding 3.427% with spread of 125 basis points higher than Treasuries. The interest will be paid semi-annually, with the first payment due on February 23, 2012.

The new notes has been rated A1 by Moody's Investors Service, a credit rating arm of  Moody's Corporation (MCO - Analyst Report), AA- by Fitch and AA- by Standard & Poor's.

The proceeds from the offering are intended to be used for general corporate purposes. Moreover, Northern Trust may use the proceeds for the repayment of its outstanding debt securities. As of June 2011, Northern Trust’s long-term debt amounted to $2.4 billion.

J.P. Morgan Securities LLC, a division of JPMorgan Chase & Co. (JPM - Analyst Report) and Morgan Stanley (MS - Analyst Report) are acting as joint book-running managers for the offering.

In July, Northern Trust completed the acquisition of Omnium LLC, a leading hedge fund administrator, from Citadel. The acquisition of Omnium, which has around $70 billion in assets under administration, will enhance Northern Trust’s capabilities and create an industry-leading hedge fund administration platform for institutional investors.

Northern Trust has made investments in businesses to serve its clients in the U.S. and around the world uninterruptedly. In December 2010, the company announced the acquisition of Waterline Partners, a top ranked investment advisory firm based in Los Angeles.

Northern Trust expects Waterline to work in conjunction with the client-focused strategy of the company while also strengthening its presence on the west coast of the United States.

In June 2011, Northern Trust completed the acquisition of Bank of Ireland Securities Services (BoISS) from Bank of Ireland Group for €60 million ($82 million) as announced in February 2011. Through this acquisition, Northern Trust expects to combine the fund administration business with the existing activities in Ireland and provide outstanding consumer service and solutions to clients.

The acquisition will improve and expand Northern Trust’s Global Fund Service capabilities, particularly in the fund administration and ETFs.

Moreover, Northern Trust announced the expansion of its services in Australia during the quarter. The company incorporated Unit Registry solutions to improve its fund administration capabilities in Australia. Northern Trust has signed an agreement with Computershare to provide such services combining local expertise with a wide range of worldwide capabilities.

Despite the current sluggish environment, the company has made further investments in businesses to continue to serve the clients in the U.S. and around the world. The latest capital raising initiative will facilitate the company to reduce its total debt burden to some extent. On the other side, this capital raising will help Northern Trust to enhance capital ratios, thereby boosting growth and providing more acquisition opportunities.

Northern Trust currently retains its Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our long-term Neutral recommendation on the stock.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%