FedEx Corp. is borrowing $1.5 billion to fund a contribution to its pension plan that it announced last week after the passage of tax law changes.
The company is selling bonds in as many as two parts, it said in a filing Monday. The longer-term portion of the offering, a $1 billion, 30-year security, may yield 1.12 percentage points more than Treasuries, down from initial talk of around 1.3 percentage points, according to a person with knowledge of the matter, who asked not to be identified as the details are private.
Memphis-based FedEx had projected obligations of $29.91 billion in its U.S. pension plan as of May 31, and the plan was 88 percent funded as of that date, according to its annual regulatory filing.
Other companies such as AbbVie Inc. and 3M Co. also have recently said they were boosting their pension contributions in light of the tax changes.
FedEx’s Chief Financial Officer Alan Graf said on a Dec. 19 earnings call that should the tax changes pass, the company would use some of the savings to make additional pension fund contributions. President Donald Trump signed the tax bill into law on Dec. 22.
Last week, FedEx said its voluntary contribution would be $1.5 billion.