On Sep 14, 2009, Textron Inc. (TXT) sold notes in two parts worth $600 million. The size of the deal represents a 20% increase from the originally planned $500 million.

Bank of America Corporation (BAC), Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) were the joint book-running managers for the sale. Barclays (BARC) and Citigroup Inc. (C) also acted as the joint passive book-running managers for the sale.

The notes belonging to the first tranche worth $350 million were issued at a discount at $99.881 and are expected to yield a (yield to maturity) YTM of 6.226%. The notes carry a coupon rate of 6.20% and will mature on Mar 15, 2015. The notes will pay coupons semi-annually with the first payment expected on Mar 15, 2010.

The notes belonging to the second tranche worth $250 million were also issued at a discount at $99.749 and are expected to yield a (yield to maturity) YTM of 7.285%. The notes carry a coupon rate of 7.25% and will mature on Oct 1, 2019. The notes will pay coupons semi-annually with the first payment expected on Apr 1, 2010.

Standard & Poor’s Ratings Services (S&P) assigned ‘BBB-’ rating; Fitch rated it ‘BB+’, while Moody’s assigned ‘BAA3′ rating to both the notes. The company will use the sale proceeds of the debentures for general corporate purposes.

Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known for its powerful brands such as Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems.

With tentative signs of stabilization at Cessna, and further progress in the liquidation of Textron Finance Corporation, we expect limited downside for Textron and hence maintain a Neutral recommendation on the stock.

Zacks Investment Research
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