Dell increased the amount of debt it will raise in the investment-grade bond market after the computer maker received over $80bn (€70.7bn) of orders from investors.
The company now plans to sell $20bn of notes, up from an initial target of about $16bn, according to a source, to help pay for its acquisition of EMC.
The offering will be the year’s biggest corporate bond sale since Anheuser-Busch InBev sold $46bn of bonds in January to finance its takeover of SABMiller.
The demand is allowing Dell to lower the interest rate on the bonds.
The longest part of the offering, $2bn of 30-year bonds, will now pay 5.75 percentage points more than similar-maturity US Treasuries, the person said.
While that’s down from an original offer of 6.25 percentage points it’s 3.55 percentage points more than the average spread on all US corporate bonds of similar ratings and maturities, according to Bank of America Merrill Lynch data.
A proposed $4.5bn 10-year note may yield 4.25 percentage points above government debt. That’s a premium of more than 1.5 percentage points over comparable notes.
The debt was first marketed at a premium of 4.75 percentage points.
Dell’s bond offering comes on the heels of the busiest week for bond sales by blue-chip companies in the US and Europe since January. Top-rated issuers sold about $74bn in the five-day period ending May 13.
Creditsights analysts led by Erin Lyons rated the offering the equivalent of a buy in a note on Monday, saying the bonds offer “compelling value” compared to the debt of peers including HP and Hewlett Packard.
Moody’s Investors Service assigned a Baa3 rating to the bonds last week. S&P Global Ratings graded the debt an equivalent BBB-. Dell also plans to sell $3.25bn of unsecured notes in the high-yield market, according to S&P.
Bank of America, Barclays, Citigroup, Credit Suisse, Goldman Sachs and JP Morgan Chase are managing the sale.
Investors have been on the lookout for a host of debt offerings from Dell since the company said in October that banks had committed $49.5bn of financing for the EMC takeover.
In April, the computer maker was close to placing a senior portion of the debt financing — $11bn of term loans that were up-sized by $1bn — through a syndicate of 24 banks.
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