TE Connectivity announces pricing of €750 million 3.250% senior notes offering

Rhea-AI Summary

TE Connectivity (NYSE: TEL) announced that its subsidiary, Tyco Electronics Group S.A., has priced an offering of €750 million in senior notes due 2033. The notes will be issued at 99.136% with a 3.250% annual interest rate, payable annually.

The offering is being made under a registration statement filed on October 1, 2024, with the expected closing date of January 31, 2025. The company plans to use the net proceeds for general corporate purposes, including potential debt repayment. BofA Securities Europe SA, Citigroup Global Markets , and J.P. Morgan Securities plc are serving as joint book-running managers for the offering.

Positive

• Successful pricing of €750 million senior notes offering
• Relatively favorable 3.250% interest rate in current market conditions
• Potential debt restructuring opportunity through proceeds

Negative

• Additional long-term debt obligation until 2033
• Notes priced below par at 99.136%

Insights

Fixed Income Analyst

TE Connectivity's €750 million senior notes offering reflects strategic financial management in the current market environment. The 3.250% coupon rate and 99.136% issue price indicate strong market confidence in the company's credit profile, particularly notable given the 9-year tenor extending to 2033.

The EUR-denominated issuance is particularly shrewd, capitalizing on the European debt market's typically lower interest rates compared to USD markets. This approach also provides natural hedging for TE's substantial European operations and revenue streams. The pricing suggests a yield-to-maturity of approximately 3.35%, representing an attractive funding cost in the current rate environment.

The timing of this issuance is notable, as it allows TE Connectivity to potentially refinance existing debt at favorable rates before any potential market volatility. The involvement of top-tier underwriters (BofA, Citigroup and J.P. Morgan) underscores the offering's institutional quality and should ensure broad distribution among European investors.

From a balance sheet perspective, this offering enhances TE's financial flexibility without significantly impacting its leverage metrics. The general corporate purposes designation, including potential debt repayment, suggests a proactive approach to liability management rather than aggressive expansion, which should be viewed positively by credit markets.

GALWAY, Ireland, Jan. 28, 2025 /PRNewswire/ -- TE Connectivity plc (NYSE: TEL) ("TE Connectivity") today announced that Tyco Electronics Group S.A. ("TEGSA"), its indirect wholly-owned subsidiary, has priced an offering of €750 million aggregate principal amount of its 3.250% senior notes due 2033.

The offer is being made pursuant to an effective registration statement filed by TE Connectivity, TE Connectivity Switzerland Ltd. and TEGSA on October 1, 2024, which includes a prospectus, and a prospectus supplement dated January 28, 2025.

The €750 million senior notes due 2033 will be issued at a price of 99.136% and will have a stated interest rate of 3.250% per year, payable annually.

TE Connectivity intends to use the net proceeds of this offering for general corporate purposes, which may include the repayment of outstanding debt.

BofA Securities Europe SA, Citigroup Global Markets Limited and J.P. Morgan Securities plc are joint book-running managers for this offering, which is expected to close on January 31, 2025.

A copy of the base prospectus in the registration statement or the prospectus supplement for the offering can be obtained from the Securities and Exchange Commission's website at www.sec.gov or by calling BofA Securities Europe SA toll free at 1-800-294-1322, Citigroup Global Markets Limited toll free at 1-800-831-9146, J.P. Morgan Securities plc at +44-20 7134-2468 (Non-US investors), or J.P. Morgan Securities LLC collect at +1-212-834-4533 (US investors).

This announcement does not constitute an offer to sell or the solicitation of offers to buy any security and shall not constitute an offer, solicitation, or sale of any security in any jurisdiction in which such offer, solicitation, or sale would be unlawful.

About TE Connectivity

TE Connectivity plc (NYSE: TEL) is a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, renewable energy, automated factories, data centers, medical technology, and more. With more than 85,000 employees, including 9,000 engineers, working alongside customers in approximately 130 countries, TE ensures that EVERY CONNECTION COUNTS.

Forward-Looking Statements

This release contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainties and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements regarding the notes offering. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, the extent, severity and duration of business interruptions negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and impacts of offsetting hedges; natural disasters and political, economic and military instability in countries in which we operate, including the continuing military conflicts in certain parts of the world; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Irish tax reform (if applicable). More detailed information about these and other factors is set forth in TE Connectivity plc's Annual Report on Form 10-K for the fiscal year ended Sept. 27, 2024 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

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SOURCE TE Connectivity plc

FAQ

What is the interest rate and maturity of TE Connectivity's (TEL) new senior notes?

TE Connectivity's new senior notes have a 3.250% interest rate and will mature in 2033.

How much did TE Connectivity (TEL) raise in their January 2025 senior notes offering?

TE Connectivity raised €750 million through their senior notes offering.

What is the issue price of TEL's 2033 senior notes?

The senior notes are being issued at a price of 99.136% of their face value.

How will TE Connectivity (TEL) use the proceeds from the 2025 notes offering?

TE Connectivity plans to use the proceeds for general corporate purposes, which may include repaying outstanding debt.

When will TEL's January 2025 senior notes offering close?

The senior notes offering is expected to close on January 31, 2025.