Charles Schwab Sells $2.35B in Bonds After Announcing Cost-Cutting Strategies

Charles Schwab filed a prospectus to sell senior unsecured fixed and floating rate notes worth $2.35 billion late on Tuesday following news that the financial services company was implementing a cost-cutting strategy that included office closures and layoffs in advance of its impending merger with TD Ameritrade

The unsecured bond notes totaled $1.35 billion in fixed-to-floating rate senior notes due in 2034 and $1 billion in senior notes due in 2026, according to the regulatory filing.

The yield-to-maturity percentage of the fixed-to-floating rate note is 6.136%, and the separate fixed rate note is 5.906%. The proceeds are intended for “general corporate purposes”, according to a Bloomberg article that quoted a source familiar with the transaction.

Schwab’s bond offering came only one day after the business reported in a regulatory filing that it was preparing a significant round of layoffs and simultaneous office closures as part of a broader cost-cutting campaign. These actions are expected to save the company $500 million.

“The company is currently assessing its real estate footprint, and plans to close or downsize certain corporate offices,” the firm said in the filing.