Alliance Data Systems Corporation
) issued senior notes worth $400 million. With maturity
scheduled in December 2017, these notes carry a coupon of 5.25%.
ALLIANCE DATA (ADS): Free Stock Analysis
DISCOVER FIN SV (DFS): Free Stock Analysis
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Interest on the notes will be paid semiannually with the first
interest payment scheduled for June, 2013. Alliance Data offered
the notes at 99.912% of the face value to yield 5.5% if held till
Alliance Data intends to deploy the proceeds from the issuance to
finance the acquisition of Hyper Marketing group of companies as
well as for corporate purposes.
With this new issuance, the company's liquidity increased to $2.1
billion. However, there was no material effect on the debt equity
ratio. Alliance Data ended the third quarter of 2012 with a debt
equity ratio of 83.2%, improving substantially from 92.5% at 2011
The new issuance would require Alliance Data to dish out $21
million annually in interest. Nevertheless, the company's solid
operational performance generates enough funds to service the
debt uninterruptedly. Its interest expense in the last quarter
escalated 15% year over year.
Alliance Data ended the third quarter with debt of approximately
$1.7 billion, reflecting a reduction of $502.9 million in the
first nine months of the year.
The last notes issuance by the company dates back to March of
this year when it issued $500 million 6.375% senior notes with
maturity scheduled for April 1, 2020.
Alliance Data's operating earnings in the third quarter were 9.3%
ahead of the Zacks Consensus Estimate. Results augmented
approximately 8.3% year over year and outperformed the guidance
The Zacks Consensus Estimates for the fourth quarter and 2012 are
currently pegged at $1.67 per share and $8.17 per share
respectively. These estimates translate into year-over-year
improvements of 5% and 14%, respectively for the fourth quarter
and full year 2012. The Zacks Consensus Estimate for 2012 is shy
of company's guidance of $8.60, which reflects a 13%
Alliance Data currently carries a Zacks #3 Rank, translating into
a short-term Hold rating.
Discover Financial Services
), which competes with the company, carries a Zacks #2 Rank,
translating into a short-term Buy rating.