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FedEx Freight Sells $3.7 Billion of Bonds Ahead of Spinoff
Four-Part Offering Includes Notes Maturing in 3 to 10 Years
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FedEx Freight Holding Co. raised $3.7 billion in its debut investment-grade dollar bond sale, ahead of its planned June 1 spinoff from FedEx Corp.
Tuesday’s four-part offering includes notes maturing in three to 10 years, according to a person familiar with the matter. The $1 billion 10-year, the longest tranche in the deal, is expected to yield 1.07 percentage points over Treasuries, more than 30 basis points tighter than initial price talk, said the person, who asked not to be identified because they are not authorized to speak publicly.
Proceeds will be paid to FedEx as part of the consideration for the spinoff, the company said in a statement.
FedEx said in December 2024 it would separate its freight business as part of a broader streamlining effort.
The transaction is among five in the U.S. investment-grade market Jan. 27. The sector is on pace for a record January, starting the day roughly $11 billion shy of the $189 billion priced in 2024 as tight spreads continue to draw issuers.
Moody’s Ratings and S&P Global Ratings both put FedEx Freight one notch above junk territory with their initial grades.
FedEx Freight is likely to remain under pressure in 2026 as weakness persists in the less-than-truckload freight sector, CreditSights analysts Matt Woodruff and Arda Tirnakli wrote in a Jan. 27 report, citing several years of declining revenue and Ebitda.
Including leases puts FedEx Freight’s leverage at about four times Ebitda, making it appear “aggressively capitalized for an IG issuer,” the analysts wrote. The structure also creates “awkward relative value” versus junk-rated peer XPO Inc., which carries lower leverage, they said.
As for FedEx, “proceeds from the note offering will only partially offset FDX creditors for the lost profitability and diversification from the spin,” according to a Gimme Credit note published Jan. 27.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and FedEx Freight ranks No. 1 on TT’s LTL sector list.
Also, FedEx ranks No. 3 on the TT Top 50 list of the largest global freight carriers, and FedEx Logistics ranks No. 43 on the TT Top 100 logistics companies list.
