A spot of financial housekeeping over at Tesco PLC (LSE:TSCO) serves to highlight Britain's biggest grocery chain’s “strong asset backed balance sheet, low non-lease indebtedness and strong cash flows from operations”, said Shore Capital Markets’ retail expert Clive Black.
The housekeeping at hand is Tesco’s repurchase and cancellation of €38 million in bonds issued in 2007.
This forms part of an original €600 million 5.25% issue due in 2047, leaving approximately €147 million outstanding.
Tesco closed the transaction using internal liquidity, thus will “slightly improve the ongoing solvency metrics and financing costs of the group”, said Black.
Black added that an ongoing £1 billion share buyback programme is “really starting to mount to beneficial (earnings per share) effect” via de-equitisation.
Tesco shares are a buy at 365p, is Shore Cap’s view.