Hartford Financial Services Group (NYSE:HIG) announced it will sell $1.1 billion in bonds and another $1.95 billion in preferred and common stock in order to pay back the $3.4 billion in TARP funds it received from the Treasury Department.
Capital raised from the bond offering will be used by Hartford to buy back preferred shares held by the Treasury. They will also use the money to pay down debt this year and in 2011, said the company.
Even though yields have narrowed for investment grade bonds for the ninth day in a row, demand for them seems to be insatiable, as they are acquired quickly by investors. Just last week $28.4 billion of investment-grade debt was sold, a huge 43 percent increase over the average so far in 2010.
Concerning the selling of common shares by Hartford, there will be somewhere around 52.3 million offered at $27.75 a share, with 20 million preferred shares selling for $25 a share. Common shares should raise about $1.45 billion and the convertible preferred stock another $500 million.
Senior debt worth $425 million will be issued by Hartford which will also be used to pay down its TARP obligations, with another $675 million issued to pay down other existing senior obligations.
Underwriting the issuance are Goldman Sachs (NYSE:GS) and JP Morgan (NYSE:JPM). The two retain the option to acquire up to 8 million in common shares and 3 million in preferred shares.
