FedEx Corp. is borrowing $1.5 billion to fund a contribution to its pension plan that it announced last week after the passage of U.S. tax law changes.
The company sold 10- and 30-year bonds on Monday, with the $1 billion longer-term portion of the offering yielding 1.12 percentage points more than Treasuries. That’s down from initial talk of around 1.3 percentage points, according to a person with knowledge of the matter, who asked not to be identified as the details are private.
FedEx’s Chief Financial Officer Alan Graf said on a Dec. 19 earnings call that should the tax changes pass, the company would use some of the savings to make additional pension fund contributions. U.S. President Donald Trump signed the tax bill into law on Dec. 22. Last week, FedEx said its voluntary contribution would be $1.5 billion.
Morgan Stanley, Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. managed the bond sale, FedEx said in a preliminary filing.