Yum, McD sell combined $2.7B in debt

NEW YORK Quick-service giants Yum! Brands Inc. and McDonald’s Corp. sold a combined $2.7 billion in unsecured senior notes this week to fund general corporate purposes, the companies said. The sales also would help the companies fulfill promises to return at the least a combined $19 billion to shareholders by 2009.

On Monday, Oak Brook, Ill.-based McDonald’s sold $1.5 billion in debt under two deals arranged by joint-book runners Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc. The total offering was larger than the expected sale of $1 billion in notes, as reported by Reuters on Monday. The debt was issued in two pieces, including $650 million in 5.8-percent medium term notes due 2017 and $850 million in 6.3-percent medium term notes due 2037. Both were rated investment grade by Moody’s, Standard & Poor’s and Fitch Ratings.

Citing its strong cash flow and consistently strong credit rating, McDonald’s said last month that it planned to return between $15 billion and $17 billion in cash to shareholders from 2007 through 2009.

Louisville, Ky.-based Yum is expected to complete by Wednesday a $1.2 billion senior unsecured note offering, which will be issued in two pieces, according to a Standard & Poor’s statement: $600 million in notes due 2017 and $600 million due 2037. The credit rating agency has given an investment grade rating to Yum’s pending deal, which is expected to be priced on Tuesday.

Yum, which is parent company to the Pizza Hut, KFC and Taco Bell brands, said this month in its latest quarterly report that it expected to increase shareholder value by investing up to $4 billion in share repurchases by the end of 2009.