Howmet Aerospace Completes Debt Actions
- None.
- None.
Howmet Aerospace's recent financial maneuvers, including the drawing of term loans and the early partial redemption of its 2024 Notes, signal a strategic approach to debt management. The decision to secure fixed interest rates via interest rate swaps at an average of 3.9% is indicative of a proactive measure against potential interest rate volatility. Moreover, the early redemption of the 2024 Notes, using a mix of cash and loan proceeds, demonstrates a balance between liquidity preservation and debt reduction. The anticipated reduction in annualized interest expenses by $10 million suggests a positive impact on the company's net interest margin and overall profitability.
The credit rating upgrade by S&P to 'BBB-' reflects an improved perception of creditworthiness and could result in lower borrowing costs for future debt issuances. This upgrade to investment grade status by two major credit agencies may attract a broader base of fixed-income investors and potentially enhance the company's stock market performance through increased investor confidence.
The upgrade of Howmet Aerospace's Long-Term Issue Credit Rating to 'BBB-' from 'BB+' is a significant milestone. Investment grade status generally indicates a lower risk of default, which can lead to a more favorable borrowing environment. The stable outlook suggests that S&P expects Howmet's financial position to remain consistent or improve, underlining the company's solid financial leverage and strong cash flow generation. This credit rating improvement is likely to be well-received by debt investors and could have positive implications for the company's future financing activities and terms.
Howmet Aerospace's strategic debt restructuring and the credit rating upgrade are likely to resonate positively among investors and market analysts. The actions taken by the company align with broader industry trends where firms seek to lock in lower fixed interest rates in anticipation of a rising rate environment. The company's ability to reduce its interest expense while maintaining a solid credit rating could be seen as a testament to its fiscal prudence and operational efficiency. In the long term, this may enhance the company's competitive position within the aerospace sector, which is known for its high capital expenditure and cyclical demand.
Key Announcements
-
In December 2023, Howmet Aerospace drew approximately
$400 million $200 million U.S. dollar-denominated term loan facility (the “USD Term Loan Facility”) and approximately$200 million -
The Company entered into interest rate swaps to exchange the floating interest rates of the term loan facilities into fixed interest rates. The weighted average fixed interest rate is approximately
3.9% . -
On December 28, 2023, the Company completed an early partial redemption of its
5.125% Notes due October 2024 (the “2024 Notes”) in the aggregate principal amount of$500 million $506 million $6 million $205 million -
The combined impact of the term loans and the early partial redemption of the 2024 Notes is expected to reduce annualized interest expense by approximately
$10 million - On December 15, 2023, S&P Global Ratings (“S&P”) upgraded Howmet Aerospace’s Long-Term Issue Credit Rating to “BBB-” from “BB+” and updated the rating outlook to stable. With this upgrade, Howmet Aerospace is now rated as investment grade by two of the three credit rating agencies.
As previously disclosed, on November 22, 2023, the Company entered into two senior unsecured term loan agreements. One term loan facility is
In December 2023, the Company also entered into interest rate swaps to exchange the floating interest rates of the approximately
On December 28, 2023, the Company completed an early partial redemption of its 2024 Notes in the aggregate principal amount of
The combined impact of the term loans and the early partial redemption of the 2024 Notes is expected to reduce annualized interest expense by approximately
S&P Rating Upgrade and Update Outlook to Stable
On December 15, 2023, S&P upgraded the Company’s Long-Term Issue Credit Rating to “BBB-” from “BB+” and updated the rating outlook to stable. With this upgrade, Howmet Aerospace is now rated as investment grade by two of the three credit rating agencies, reflecting the Company’s improved financial leverage and strong cash generation.
About Howmet Aerospace
Howmet Aerospace Inc., headquartered in
Dissemination of Company Information
Howmet Aerospace intends to make future announcements regarding Company developments and financial performance through its website at www.howmet.com.
Forward-Looking Statements
This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates," "believes," "could," “envisions,” "estimates," "expects," "forecasts," "goal," "guidance," "intends," "may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets," "will," "would," or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements relating to any future debt actions. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) deterioration in global economic and financial market conditions generally; (b) unfavorable changes in the markets served by Howmet Aerospace; (c) the impact of potential cyber attacks and information technology or data security breaches; (d) the loss of significant customers or adverse changes in customers’ business or financial conditions; (e) manufacturing difficulties or other issues that impact product performance, quality or safety; (f) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (g) failure to attract and retain a qualified workforce and key personnel; (h) the inability to achieve revenue growth, cash generation, restructuring plans, cost reductions, improvement in profitability, or strengthening of competitiveness and operations anticipated or targeted; (i) inability to meet increased demand, production targets or commitments; (j) competition from new product offerings, disruptive technologies or other developments; (k) geopolitical, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including geopolitical and diplomatic tensions, instabilities, conflicts and wars, as well as compliance with
View source version on businesswire.com: https://www.businesswire.com/news/home/20231228357106/en/
Investor Contact
Paul T. Luther
(412) 553-1950
Paul.Luther@howmet.com
Media Contact
Rob Morrison
(412) 553-2666
Rob.Morrison@howmet.com
Source: Howmet Aerospace Inc.
FAQ
What did Howmet Aerospace announce in December 2023?
How much did Howmet Aerospace draw from the U.S. dollar-denominated term loan facility?
What was the impact of the combined term loans and the early partial redemption of the 2024 Notes?
What was the Long-Term Issue Credit Rating upgrade by S&P Global Ratings for Howmet Aerospace?
