J.B. Hunt Transport to raise $500 million in bond underwriting

J.B. Hunt Transport Services Inc. recently entered into an underwriting agreement with J.P. Morgan Securities, Goldman, Sachs and Morgan Stanley on the issuance and sale of $500 million in new bonds, according to a filing with Securities and Exchange Commission on Friday (March 7).

The notes include $250 million in principal at 2.4% due in 2019 and $250 million at 3.85% due in 2024. Proceeds are expected to be used to repay certain outstanding indebtedness and for general corporate purposes. These senior notes are unsecured obligations of the company and will rank equally with all of the company’s existing unsecured obligations, according to the release.

On Feb. 28,  Moody’s Investor Service raised the transportation giant’s unsecured debt rating to Baa1, from Baa2. At the same time Moody’s affirmed the company’s short-term rating and with an overall stable outlook.

Moody's notes that the ratings upgrade is warranted by J.B. Hunt's strong track record of revenue growth, consistent margins and solid cash flow generation. Since 2010, the company has demonstrated annual revenue growth of at least 10%, operating income margins of around 10% and cash flow from operations of approximately $400 to $600 million annually.

J.B. Hunt has a $150 million variable rate loan due this month, and $100 million in senior notes at 6.08% due in July. Each of these are expected to be retired with the new capital raised.