Humana Inc. borrowed $1 billion from investors Wednesday with a public offering of senior notes.
The Louisville, Kentucky-based health insurer placed $600 million in 10-year senior notes. Those notes are due March 15, 2027, at 99.877% of the principal amount. The notes pay an interest rate of 3.95%.
The company also placed $400 million in 30-year senior notes. Those notes are due March 15, 2047, at 99.905 percent of the principal amount. They pay an interest rate of 4.8 percent.
Humana expects to end up with $988 million in cash after it pays the companies that underwrote the offering.
The managers of the offering were Bank of America Merrill Lynch, J.P. Morgan, Morgan Stanley and US Bancorp. The managers each took 2027 notes with a principal amount of $114.75 million and 2047 notes with a principal amount of $76.5 million.
Humana says it will use the proceeds for general corporate purposes, including investments, acquisitions and working capital.
The company says that, at the end of 2016, the terms of various credit and business arrangements gave it the financial capacity to take on about $4.6 billion in additional debt.
Humana is active in the group health market and the Medicare plan market. It has a small closed block of stand-alone long-term care insurance business.
The company gives a detailed description of risks it faces in the offering prospectus. It notes that some of the possible risks include problems with bargaining for good prices on drugs, data security problems, and failures to strategically implement new information systems.
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