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COLUMBUS, Ohio - Bread Financial Holdings, Inc. (NYSE:BFH), a personal credit institution with a market capitalization of $2.3 billion, has announced the closure of its offering of $400 million in subordinated notes, dated today. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations. The 8.375% Fixed-Rate Reset Subordinated Notes, set to mature in 2035, were issued under an indenture between Bread Financial and U.S. Bank Trust Company, National Association as trustee.
These notes are unsecured subordinated obligations of Bread Financial, ranking equally with all existing and future subordinated indebtedness but junior to any senior indebtedness, including certain credit agreements and senior notes due in 2028 and 2029. The company’s total debt stands at $5.7 billion, with a debt-to-equity ratio of 1.86x, according to recent InvestingPro data. Notably, these notes are not guaranteed by any of Bread Financial’s subsidiaries.
Interest on the notes will accrue at an annual rate of 8.375% until June 15, 2030, after which the rate will reset to the Five-Year U.S. Treasury Rate plus 430 basis points. Interest payments are scheduled semiannually with the first payment due on June 15, 2025. The company retains the option to redeem the notes in whole, but not in part, on June 17, 2030, or within 90 days following a "regulatory capital treatment event," at a price equal to the principal amount plus accrued and unpaid interest.
The indenture does not impose restrictive covenants on the company, except for limitations on merging, consolidating, or selling substantially all of its assets. An "Event of Default" may trigger the acceleration of the notes’ maturity, subject to certain conditions.
This financial move follows the company’s previous credit agreement dated June 7, 2023, involving JPMorgan Chase (NYSE:JPM) Bank, N.A., and other financial institutions as lenders, further illustrating Bread Financial’s active management of its capital structure.
The information disclosed is based on the company’s filing with the Securities and Exchange Commission and includes forward-looking statements subject to risks and uncertainties. Bread Financial’s expectations are based on assumptions that may be affected by market conditions, regulatory changes, and other factors as outlined in their SEC filings. The company undertakes no obligation to update forward-looking statements beyond what is required by law.
Bread Financial, formerly known as Alliance Data Systems Corp., specializes in branded credit programs and is headquartered in Columbus (WA:CLC), Ohio. The company has maintained dividend payments for 10 consecutive years, currently offering a 1.73% yield. InvestingPro analysis reveals 8 additional key insights about the company’s performance and prospects, available to subscribers through the comprehensive Pro Research Report, which provides deep-dive analysis of over 1,400 US stocks.
In other recent news, Bread Financial Holdings Inc. reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an adjusted diluted earnings per share (EPS) of $0.41, exceeding the forecast of $0.3209. Despite this earnings beat, the company’s revenue fell short of predictions, recording $90 million, a 9% year-over-year decline. Additionally, Bread Financial announced a new $150 million share repurchase program, reflecting an ongoing strategy to strengthen its financial position. In a move to raise capital, the company plans to offer $400 million in fixed-rate reset subordinated notes, with proceeds partly intended for share repurchases. JMP Securities maintained a Market Perform rating on Bread Financial, highlighting challenges from rising competition and uncertainties in net interest margins. The company also reported a decrease in net loss and delinquency rates for January 2025 compared to the previous year, indicating improved credit performance. These developments indicate Bread Financial’s efforts to navigate a challenging economic environment while reinforcing its financial stability.
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