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Intercontinental Exchange Offers $2.5 Billion Senior Notes

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Intercontinental Exchange, Inc. (ICE - Free Report) announced the pricing of $2.5 billion aggregate principal amount of senior unsecured notes.

The senior notes consist of $1.25 billion in aggregate principal amount with an interest rate of 2.100%. These are scheduled to mature in 2030. The remaining $1.25 billion senior notes, carrying an interest rate of 3.000%, are scheduled to mature in 2050.

The company aims to deploy the net proceeds from the sale of the Notes for general corporate purposes, which may include funding the redemption of its $1.25 billion aggregate principal amount carrying an interest rate of 2.75% and scheduled to mature in 2020. Also, the net proceeds are intended to pay down a portion of Intercontinental Exchange’s commercial paper outstanding.

The company issued senior notes amid a low interest rate environment to get hold of more funds and enhance financial flexibility without affecting its liquidity. As of Mar 31, 2020, Intercontinental Exchange had $2 billion liquidity.

As of Mar 31, 2020, total debt of the company was about $5.5 billion, down 0.1% from 2019 end. The debt-to-capital ratio on Mar 31, 2020 was 24.6, up 40 basis points from 2019 end and compared unfavorably with the industry average of 19.7. The debt level of the company has decreased over the last few years and its debt to capital improved. Nonetheless, the latest offering will increase the debt-to-capital ratio by 740 basis points.

The firm’s times interest earned of 10.4 as on Mar 31, 2020 is better when compared with the 2019 end figure of 9.7. The improvement in this ratio indicates that the firm will be able to meet current obligations in the near future without any difficulties.

By capitalizing on the low interest rate environment, the company is also attempting to reduce its interest burden, thus facilitating margin expansion. Also, the company’s operational strength should enable it to service debt uninterruptedly, thereby maintaining the stock’s creditworthiness.

Shares of this Zacks Rank #2 (Buy) company have outperformed the industry in a year’s time. The stock has gained 18% compared with the industry’s increase of 15.1%.

Other Stocks That Warrant a Look

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MarketAxess surpassed estimates in three of the last four quarters, with the average positive surprise being 1.09%.

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CME Group surpassed estimates in three of the last four quarters, with the average positive surprise being 3.08%.

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