[vc_row][vc_column][vc_column_text css_animation=”fadeInDown”]
Visa And Yet Another Tailwind
[/vc_column_text][vc_column_text]Visa issued $15 billion or so in debt to fund the Visa Europe acquisition.
That debt is still on the balance sheet, but it is beginning to come due.
What Visa does when that happens will shift the composition of its balance sheet, but it has lots of options, and all of them are good for the stock.
Visa (NYSE:V) has been a tremendously successful stock since it came public several years ago. The company’s success allowed it to be debt-free for many years, but recently, it dipped its toe in the debt market to fund its acquisition of Visa Europe. That transaction immediately took Visa from a self-financed company to one that relies on a decent amount of debt, and that has not changed in the time since the purchase occurred. But what impact has that had on Visa’s earnings and its ability to take on more debt in the future, if needed?
To find the answers to those questions, I’ll be using data from Seeking Alpha.
We’ll begin with a look at the company’s short- and long-term debt, in addition to the interest expense associated with those items for the past five years and an estimate for this fiscal year, which is nearly complete.
Ordinarily, I wouldn’t leave a bunch of blank spaces in the chart, but in this case, I did it intentionally to show the major change Visa went through with its capital structure to buy Visa Europe. This is not a company that had $15 billion lying around that it could throw at the transaction, so apart from a highly dilutive stock offering, debt was the only viable option. Visa issued over $15 billion in debt in conjunction with the transaction, and some of that has since moved into short-term debt because it is coming due. The total is almost exactly the same now as it was at the end of 2016, but the composition is very slightly different.[/vc_column_text][vc_raw_html]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[/vc_raw_html][/vc_column][/vc_row]