Waste Management Prices $350M Note Offering - Analyst Blog

Waste Management, Inc. WM, a provider of integrated waste management services, announced the pricing of its underwritten 10-year note issuance. The company confirmed that the offering will be worth $350 million in aggregate principal amount of 3.50% notes due May 15, 2024.

The offering closes on May 8, 2014. The notes will have complete and unconditional guarantee of Waste Management Holdings, Inc., a wholly-owned subsidiary of the company. J.P. Morgan Securities LLC, the U.S. investment banking arm of JPMorgan Chase JPM, Deutsche Bank Securities Inc., a division of Deutsche Bank AG DB and RBS Securities Inc. are acting as the joint lead managers and handling the book-running of the issue.

The company plans to utilize the net proceeds of the offering to pay down about $346 million of outstanding borrowings, obtained under its revolving credit facility. The revolving credit facility was accessed to pay back its 5.00% senior notes that matured in March 2014.

The note offering will be neutral to the company's leverage following the repayment of the revolver debt. As of Mar 31, 2014, Waste Management's long-term debt stood at $8,978 million.

Fitch Ratings, a leading credit rating agency, assigned a 'BBB' rating to Waste Management's planned senior unsecured note issue.  This indicates that the company has adequate capacity to meet its financial commitments.

Other credit rating agencies like Moody's gave the company a comparable Baa3 rating, while Standard & Poor's accredited the company with a slightly better rating of A-. It denotes a strong capacity to meet financial obligations, though moderately vulnerable to adverse economic circumstances.

Waste Management has a leading market position in the industry, showing consistently strong operating performance with strong cash flow characteristics.

Last month, Waste Management reported first quarter 2014 results wherein it beat earnings healthily, driven by a solid execution of strategic plans and vital momentum in both yield and cost controls. The company withstood operational hurdles caused by the harsh winter, thus demonstrating business stability and robust profitability.

Waste Management currently holds a Zacks Rank #3 (Hold). Another stock in the industry that is worth considering is Clean Harbors, Inc. CLH, sporting a Zacks Rank #2 (Buy).