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Dell Said to Offer Premium to Lure Buyers to EMC Bond Offering

  • Claire Boston
  • May 17 2016, 6:30am EDT

(Bloomberg) -- Dell Inc. is paying up to sell more than $16 billion of secured bonds that will finance its $67 billion acquisition of EMC Corp., according to a person with knowledge of the matter.

The longest part of the offering, debt maturing in 30 years, is being marketed at a yield of 6.25 percentage points above similar-maturity Treasuries, said the person, who asked not to be identified because the information is private. That’s three times more than the average spread on all U.S. corporate bonds of similar ratings and maturities, according to Bank of America Merrill Lynch data.

A proposed 10-year note may yield 4.75 percentage points above government debt, said the person. That’s a premium of almost 2 percentage points over comparable debt.

The deal is expected to price this week. Bank of America Corp., Barclays Plc, Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the sale.

Dell’s bond sale may be the largest since Anheuser-Busch InBev NV sold $46 billion of bonds in January to finance its takeover of SABMiller Plc.

Investors have been on the lookout for a host of debt offerings from Dell since the company said in October that banks had committed $49.5 billion of financing for the takeover. In April, the computer maker was close to placing a senior portion of the debt financing -- $11 billion of term loans that were up-sized by $1 billion -- through a syndicate of 24 banks, a person with knowledge of the matter said at the time.

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