Starbucks Corp. sold $1 billion of bonds to help finance itsplan to pay out more money to shareholders.

The world's biggest coffee chain offered bonds in two parts,according to a person with knowledge of the matter. The longestportion of the offering, a 30-year security, yields 97 basis pointsmore than Treasuries, down from initial talk of between 1.20percentage points and 1.25 percentage points, said the person, whoasked not to be identified as the deal is private.

Proceeds will be used for cash dividends, share buybacks,possible acquisitions and other company needs, according to afiling Monday. Earlier this month Starbucks said it plans to return$15 billion to stockholders through a combination of dividends andequity repurchases over a three-year period starting next year. Italso said it was boosting its quarterly dividend to 30 cents ashare from 20 cents.

The company's capital return plan spurred Moody's InvestorsService to downgrade Starbucks' unsecured ratings one notch to A3,four steps above junk. Fitch Ratings also downgraded Starbucks toan equivalent A-, citing the same reasons, according to a Nov. 3report. Fitch estimates that total debt could increase by as muchas $6 billion to fund the program.

Starbucks had nearly $4 billion of long-term debt outstanding asof Oct. 1, according to a regulatory filing. It last sold bonds inMarch, in a transaction denominated in Japanese yen.

Citigroup, Goldman Sachs and U.S. Bancorp managed the bond sale,according to the Monday filing.

From: Bloomberg News

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