DBRS Assigns Rating of AA with a Stable Trend to Walmart Inc.’s New Debt Issuance

DBRS Limited (DBRS) assigned a rating of AA with a Stable trend to Walmart Inc.’s (Walmart or the Company) new debt issuance as announced on June 20, 2018. The issuance is expected to settle on June 27, 2018.

The issuance is made up of the following nine tranches (collectively, the Notes, amounting to approximately $16 billion):
-- $0.75 billion, floating rate notes due June 23, 2020
-- $0.75 billion, floating rate notes due June 23, 2021
-- $1.25 billion, 2.850% notes due June 23, 2020
-- $1.75 billion, 3.125% notes due June 23, 2021
-- $2.75 billion, 3.400% notes due June 26, 2023
-- $1.50 billion, 3.550% notes due June 26, 2025
-- $2.75 billion, 3.700% notes due June 26, 2028
-- $1.50 billion, 3.950% notes due June 28, 2038
-- $3.00 billion, 4.050% notes due June 20, 2048

DBRS notes that the Notes will be senior unsecured debt obligations and will rank equally with Walmart’s outstanding senior unsecured indebtedness. The Company intends to use a portion of the net proceeds from the sale of the Notes to fund a portion of the purchase price for the acquisition of the Flipkart Group (Flipkart) and, to the extent that the net proceeds from the sale of the Notes are not used for such purpose, for general corporate purposes.

On May 9, 2018, DBRS confirmed Walmart’s Issuer Rating and Senior Unsecured Debt rating both at AA with Stable trends. The confirmation followed the Company’s announcements that it has signed definitive agreements to become the largest shareholder in Flipkart and agreed to combine Walmart’s wholly owned U.K. retail subsidiary, ASDA Group Limited (Asda), with J Sainsbury plc (Sainsbury’s; see the DBRS press releases “DBRS Confirms Walmart Inc. Ratings Following Announcement to Acquire Majority Stake in Flipkart Group” from May 9, 2018, and “DBRS Comments on Combination of J Sainsbury plc and Walmart Inc.’s Wholly Owned Subsidiary Asda Group Limited” from May 1, 2018). DBRS confirmed the ratings, despite the likelihood of a significant increase in near-term leverage as a result of the Flipkart acquisition, based on the growth potential that the acquisition offers and Walmart’s ability to sufficiently deleverage within an acceptable time frame. DBRS believes the combination of Asda and Sainsbury’s does not have a material impact on Walmart’s credit risk profile due to Asda’s relatively small size in relation to Walmart’s overall operations and the fact that the Company will retain a meaningful stake in the combined entity.

For more details on the recent transactions, including the divestiture of Walmart Brazil, see DBRS’s rating report on Walmart, published on June 8, 2018.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating Companies in the Merchandising Industry, which can be found on dbrs.com under Methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.

This rating was not initiated at the request of the rated entity.

This rating is no longer endorsed by DBRS Ratings Limited for use in the European Union.

The rated entity or its related entities did not participate in the rating process for this rating action. DBRS did not have access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is an unsolicited credit rating.

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