Refinancing ahead of time

Smith & Nephew plc (LSE:SN) has spent September 2026 rearranging its debt. In the space of a few weeks, the medical technology group sold new ten-year dollar bonds, bought back part of an existing bond due in 2030 and called a separate bond due in 2027 for early redemption. This article explains how those steps fit together, what they mean for the company's borrowing profile, and how they sit alongside its trading performance this year.

What Smith & Nephew does

Smith & Nephew is a medical technology company listed in London and, through American depositary shares, in New York. It reports three Business units: Orthopaedics, which includes hip and knee implants; Sports Medicine and ENT; and Advanced Wound Management. The company says it employs about 17,000 people and generated sales of US$6.2 billion in 2025. Deepak Nath is chief executive.

The September bond transactions

On 10 September 2026, Smith & Nephew priced a US$700 million bond with a 5.750% coupon maturing in 2036, with net proceeds of about US$690.9 million. It said the proceeds would fund the purchase of its 2.032% senior notes due 2030 through a tender offer, with the remainder for general corporate purposes.

The tender attracted US$431.8 million of offers, against a maximum of US$250 million, so the company applied a scaling Factor and accepted US$250 million at US$878.90 per US$1,000 of principal. About US$650 million of the original US$900 million 2030 notes remain outstanding. Separately, on 18 September 2026 the company announced Redemption of its US$350 million 5.150% notes due 2027. On 1 October 2026, it confirmed that holders will receive US$1,004.60 per US$1,000 principal, including accrued interest, on 5 October 2026.

The company bought 2030 notes at below face value, while the new Debt carries a much higher coupon than those notes. This suggests the exercise is mainly about extending maturities and tidying near-term obligations rather than reducing interest cost.

Trading and financial position

In its half-year report on 4 August 2026, the company reported Revenue of US$3,097 million, up 4.6% on a reported basis and 2.3% on an underlying basis. Trading profit rose 8.1% to US$566 million, lifting the trading Margin to 18.3%. Sports Medicine and ENT grew 7.7% on an underlying basis, while Orthopaedics and Advanced Wound Management were broadly flat.

The company lowered its 2026 revenue growth guidance to about 4% from about 6%, while maintaining guidance for trading profit growth of about 8% and free Cash Flow of around US$800 million. Net debt was US$3,019 million at the half-year, or 1.8 times adjusted EBITDA, partly reflecting a US$500 million share buyback announced in May. The Interim Dividend rose 4.0% to 15.6 US cents. By 3 August, US$216 million of the buyback had been settled.

Nath said the changes implemented through the company's 12-Point Plan had made the group more resilient and better able to respond to challenges. Trading margins in the half were 24.7% in Sports Medicine and ENT, 22.0% in Advanced Wound Management and 13.0% in Orthopaedics.

Risks and what to watch

Higher coupons on new debt could increase future interest costs, and net debt has risen during the buyback. On the operating side, the company needs second-half revenue growth of 5.0% to 5.5% to meet its revised guidance, which depends on product launches and stabilising markets. In late September the company also issued press releases on product launches, including a new addition to its EVOS range.

Conclusion

Smith & Nephew is reshaping its debt by issuing a 2036 bond, retiring part of its 2030 notes and repaying its 2027 notes early, which pushes maturities further out. The company has kept profit and cash flow guidance unchanged despite lower revenue growth, so second-half trading will show whether that balance holds.