Walmart Sells US Debt, Eyes Canadian Market as Spending Grows

Walmart Inc. is selling US dollar bonds for a second time this year and sounding out investors for a debut Canadian debt offering as the world’s largest retailer seeks to diversify its funding sources amid a spending spree.

The company is seeking to raise at least $2.5 billion through a four-tranche US dollar bond offering on Monday, with maturities ranging from three to 10 years, according to people familiar with the matter. Initial price talk on the longest tenor is a yield premium of 0.75 percentage point over Treasuries, the people added, asking not to be identified because they’re not authorized to speak publicly.

Walmart has also asked Bank of America Corp., Bank of Nova Scotia and Toronto-Dominion Bank to hold investor calls on a potential debt offering in Canadian dollars, separate people said. The firm is mulling raising at least C$3.5 billion ($2.5 billion) in the deal, which would comprise four tranches spanning four to 30 years, though no final decision has been made on the transaction’s size, they added.

Walmart has boosted investments over the past few years as part of a plan to add new stores, expand its e-commerce capabilities and automate some tasks, with the company expected to spend a record $29 billion next year, according to analyst estimates compiled by Bloomberg. The retailer also has about $3.3 billion of bonds maturing next year.

With the debut Canadian-dollar debt offering, the $940 billion company is following in the footsteps of US technology giants Alphabet Inc. and Amazon.com, which have also tapped the market this year to fund their artificial intelligence infrastructure investments. The Canadian bond market offers currency and investor diversification for US borrowers, while local investors have snapped up debt sold by foreign firms to broaden their exposure across sectors and issuers.

The shorter-dated bonds are being discussed at spreads as much as four basis points wider than comparable bonds of Ontario utility Hydro One Ltd, while the longest maturity is expected to price as much as seven points tighter, the people said.

Walmart - which typically sells bonds just once a year — last tapped the US market in April, when it raised $4.25 billion.

Walmart is set to broaden its costumer reach and capture more household spending as inflation and higher gas prices squeeze budgets, Bloomberg Intelligence analysts Poonam Goya and Sydney Goodman said last week in a note to clients.

Bank of America, Walmart and BNP Paribas SA, the bank leading the US dollar bond offering, either declined to comment or didn’t immediately respond to a comment request.