Honeywell Aerospace has commenced its inaugural U.S. investment-grade bond offering, targeting a substantial $16 billion to fund its planned business separation. According to informed sources, the bond issuance will be structured into as many as nine tranches, with maturities ranging from two years to 40 years. The source further added that the initial price guidance for the longest-dated bonds is set at a spread of up to 1.35 percentage points above the yield of comparable U.S. Treasury securities. This follows a private placement plan disclosed last week by its parent company, Honeywell International Inc. (HON.US), which is expected to rank among the largest U.S. investment-grade transactions in 2026. A conference call for fixed-income investors was held on Monday. Projections from the syndicate of underwriters indicate that investment-grade bond issuance volume for this week is anticipated to reach approximately $60 billion, surpassing the $50.6 billion supply seen in early March. Although primary market activity had been subdued recently, partly due to geopolitical tensions, signs of a market recovery emerged this week. Honeywell formally announced its strategy in February 2025, under pressure from activist investors, to separate into three independent, publicly traded companies. The plan aims to consolidate Honeywell's vast operations into three distinct entities focused on automation, aerospace, and energy transition. As part of this plan, Solstice Advanced Materials (SOLS.US) completed its spin-off in October of the same year. The aerospace business unit is scheduled for separation in the third quarter of 2026 and has already secured a $4 billion revolving credit facility to support its independent operations. Regarding credit ratings, Fitch assigned an A- rating to the aerospace business, Moody's assigned an A3 rating, and S&P Global Ratings assigned a BBB+ rating. The current bond offering is being managed by a syndicate of underwriters including Bank of America, Goldman Sachs Group, JPMorgan Chase, Morgan Stanley, and Wells Fargo. Notably, Honeywell also announced last week the initiation of a bond buyback program, targeting up to $3.75 billion in U.S. dollar-denominated bonds and €1.25 billion (approximately $1.45 billion) in euro-denominated notes. Driven by positive sentiment surrounding the strategic reorganization, the parent company, Honeywell, has been active in capital markets. Year-to-date in 2026, Honeywell's stock has accumulated gains of nearly 22.8%, with the group's total market capitalization holding steady at a robust $151.5 billion.
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