Schwab Selling $2.35 Billion Bond Amid Job, Real Estate Cuts

Charles Schwab Corp. is looking to raise fresh debt in the US investment-grade bond market, after revealing plans to cull jobs and close or downsize offices to curb costs.

(Bloomberg) — Charles Schwab Corp. is looking to raise fresh debt in the US investment-grade bond market, after revealing plans to cull jobs and close or downsize offices to curb costs.

The financial services firm is selling $2.35 billion of senior unsecured notes in a two-part deal Tuesday, according to a person familiar with the matter, who asked not to be identified as the details are private. The longest dated portion of the sale, an 11-year fixed-to-floating rate note, will yield 1.8 percentage points over Treasuries after initial pricing discussions of 2.05 percentage points, the person said. Schwab dropped a separate three-year floating-rate tranche at deal launch.

The Westlake, Texas-based firm, which operates both brokerage and bank businesses, intends to use the sale proceeds for general corporate purposes. Schwab last tapped capital markets in May, selling a $2.5 billion blue-chip bond. That marked its first debt issuance since a series of regional bank failures rattled the broader banking industry, beginning in March.

Schwab’s current raise comes after the firm said in a Monday regulatory filing that it plans to shutter or downsize some real estate and lower employee headcounts to save at least $500 million in costs annually, amid investor pressure.

The company’s shares fell as much as 5.2% on Tuesday, putting it on track for its eleventh straight day of losses — the longest such streak since 2004.

Earlier this month, the firm reported temporarily lower net flows of client money as it sees attrition of some retail and advisory clients’ assets while integrating TD Ameritrade into its business.

In recent weeks, a string of large US banks including PNC Financial Services Group Inc., Bank of America Corp., Goldman Sachs Group Inc. and Huntington Bancshares Inc. have also issued debt in the US investment-grade bond market.

Charles Schwab declined to comment.

–With assistance from Silla Brush.

(Updates with launch details in second paragraph, stock move in fifth paragraph, company response in last paragraph.)

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