Fixed Income Analysis for Walmart Inc's Long Term Debt

FIXED INCOME ANALYSIS
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!) In order to opine on the amount of debt in the books of Walmart Inc, the 10-Q for the
quarter ending July 31, 2018 has been taken into consideration. The long term debt for the
company stood at $ 44,958 million. Further, the component of long term debt that is due for
repayment within next one year amounts to $ 1,090 million. It is imperative to note that the
given debt figure includes the $16 debt funding through issue of bonds for the acquisition of
FlipKart (Walmart, 2018b). This is relevant as there have been talks with regards to potential
lowering of credit rating of the company which could imply higher risk for the bondholders
and hence higher returns would be demanded (Molly, 2018).
With regards to bank loan, the company does have line of credits from 23 financial
institutions extending $ 12.5 billion and uses the same as and when required. However, as on
January 31, 2018, these lines of credit were lying unused as indicated below (Walmart,
2018a).
While the company does not have any stated debt issuance policy, it is observed that long
term debt is issues primarily in the form of bonds which potentially allows the company to
procure funding at a cheaper cost compared to banks. With regards to short term financing
needs, these are met primarily though inter-corporate funds and also working capital deficits
are efficiently managed thereby lowering the working capital needs (Walmart, 2018a).
2) The distribution of the debt in terms of maturity is indicated as follows (Walmart, 2018b).