Valero Energy Corporation Announces Pricing of Notes Offering

Rhea-AI Summary

Valero Energy (NYSE: VLO) has announced the pricing of $650 million in Senior Notes due 2030 with a 5.150% interest rate. The offering is scheduled to close on February 7, 2025, subject to customary conditions.

The company plans to use the proceeds for general corporate purposes, including the repayment, repurchase, or redemption of its outstanding 3.650% Senior Notes due 2025 and 2.850% Senior Notes due 2025. The offering is being managed by joint book-runners Citigroup Global Markets, BofA Securities, J.P. Morgan Securities, and Mizuho Securities USA.

Positive

• Successful pricing of $650 million in new senior notes
• Higher interest rate notes (5.150%) replacing lower rate notes (3.650% and 2.850%)
• Strong financial backing with four major investment banks as joint book-runners

Negative

• Increased interest expense due to higher rate on new notes
• Addition of $650 million in long-term debt to balance sheet

Insights

Fixed Income Analyst

Valero Energy's $650 million senior notes offering at 5.15% marks a significant debt refinancing initiative that warrants careful analysis. The higher interest rate on the new 2030 notes compared to the existing 2025 notes (3.65% and 2.85%) reflects the current elevated rate environment and longer duration, but the proactive refinancing demonstrates strong financial planning.

The timing of this offering is strategic, coming well ahead of the 2025 maturities, which provides flexibility in execution and helps avoid refinancing risk. The prestigious syndicate of joint book-running managers, including Citigroup, BofA Securities, J.P. Morgan and Mizuho Securities, suggests robust institutional interest and likely favorable pricing relative to market conditions.

From a credit perspective, this refinancing, while at a higher rate, extends Valero's debt maturity profile and maintains its financial flexibility. The company's ability to access the debt markets with a 5-year tenor in the current environment speaks to its strong credit standing in the energy sector. For investors, this offering represents a defensive move that strengthens Valero's balance sheet structure, though it will result in moderately higher interest expenses in the near term.

SAN ANTONIO--(BUSINESS WIRE)-- Valero Energy Corporation (NYSE: VLO, “Valero”) announced today that it has priced a public offering of $650,000,000 aggregate principal amount of 5.150% Senior Notes due 2030 (the “Notes”).

The offering is expected to close on February 7, 2025, subject to customary closing conditions. Valero intends to use the net proceeds from the offering for general corporate purposes, including the repayment, repurchase, or redemption of its outstanding 3.650% Senior Notes due 2025 and 2.850% Senior Notes due 2025.

Citigroup Global Markets Inc., BofA Securities, Inc., J.P. Morgan Securities LLC and Mizuho Securities USA LLC acted as joint book-running managers for the offering.

Copies of the prospectus supplement and accompanying base prospectus relating to the offering may be obtained from Citigroup Global Markets Inc. at 1 (800) 831-9146, BofA Securities, Inc. at 1 (800) 294-1322, J.P. Morgan Securities LLC at 1 (212) 834-4533, and Mizuho Securities USA LLC at 1 (866) 271-7403 and online at www.sec.gov.

The Notes were offered and will be sold pursuant to an effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission, and only by means of a prospectus supplement and accompanying base prospectus. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Valero

Valero Energy Corporation, through its subsidiaries (collectively, Valero), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and sells its products primarily in the United States (U.S.), Canada, the United Kingdom (U.K.), Ireland and Latin America. Valero owns 15 petroleum refineries located in the U.S., Canada and the U.K. with a combined throughput capacity of approximately 3.2 million barrels per day. Valero is a joint venture member in Diamond Green Diesel Holdings LLC, which produces low-carbon fuels including renewable diesel and sustainable aviation fuel (SAF), with a production capacity of approximately 1.2 billion gallons per year in the U.S. Gulf Coast region. See our annual report on Form 10-K for more information on SAF. Valero also owns 12 ethanol plants located in the U.S. Mid-Continent region with a combined production capacity of approximately 1.7 billion gallons per year. Valero manages its operations through its Refining, Renewable Diesel, and Ethanol segments.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250204858702/en/

Valero Contacts

Investors:

Homer Bhullar, Vice President – Investor Relations and Finance, 210-345-1982

Eric Herbort, Director – Investor Relations and Finance, 210-345-3331

Gautam Srivastava, Director – Investor Relations, 210-345-3992

Media:

Lillian Riojas, Executive Director – Media Relations and Communications, 210-345-5002

Source: Valero Energy Corporation

FAQ

What is the interest rate and amount of VLO's new senior notes offering?

Valero Energy (VLO) is offering $650 million in Senior Notes with a 5.150% interest rate, due in 2030.

When will VLO's new notes offering close?

The notes offering is expected to close on February 7, 2025, subject to customary closing conditions.

How will VLO use the proceeds from the 2030 notes?

Valero will use the proceeds for general corporate purposes, including repayment, repurchase, or redemption of its 3.650% and 2.850% Senior Notes due 2025.

Which banks are managing VLO's 2030 notes offering?

The joint book-running managers are Citigroup Global Markets, BofA Securities, J.P. Morgan Securities, and Mizuho Securities USA.

What existing VLO notes will be replaced by the new 2030 notes?

The new notes will replace Valero's outstanding 3.650% Senior Notes due 2025 and 2.850% Senior Notes due 2025.