Toner News Mobile › Forums › Latest Industry News › HP NEEDS CASH …..TO SELL $2Billion OF 5 YEAR NOTES
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AnonymousInactivehttp://www.bloomberg.com/apps/news?pid=20601103&sid=a6oc9VApHcO0&refer=us
Hewlett-Packard to Sell $2 Billion of Five-Year Notes
Dec.08–
Hewlett-Packard Co. plans to raise $2 billion to help fund its $13.2
billion purchase of Electronic Data Systems Corp., adding to record
corporate bond offerings by technology companies this
year.Hewlett-Packard, the world’s largest personal-computer maker, may
pay 4.6 percentage points over Treasuries of similar maturity to issue
five-year global benchmark notes as soon as today, according to a
person familiar with the transaction who declined to be identified
because terms aren’t set. The company had earlier marketed the debt at
about 4.63 percentage points.Hewlett-Packard, International
Business Machines Corp. and Microsoft Corp. are turning to the bond
market even as yields over benchmark rates soar to records. Sales of
bonds by technology borrowers have surged 32 percent this year to the
most ever and are equal to almost four times the 2006 tally, according
to data compiled by Bloomberg. That compares with a 27 percent decline
for all investment-grade debt.“They’re companies that are able to
handle the leverage,” said Tom Farina, a director at Deutsche Bank AG’s
insurance asset management unit in New York, which oversees $150
billion of fixed-income assets. “That’s why you get a company like
Hewlett- Packard coming to market.”Hewlett-Packard in February
sold $3 billion of corporate bonds in the Palo Alto, California-based
company’s largest offering, Bloomberg data show. The sale included
five-year 4.5 percent notes that paid a spread of 1.57 percentage
points.The securities fell 0.9 cent today to 96.4 cents on the dollar
to yield 5.46 percent, or 3.79 percentage points more than Treasuries
due in 2013, according to Trace, the Financial Industry Regulatory
Authority’s bond-pricing service. The spread was 3.39 percentage points
yesterday.IBM, Microsoft
IBM, the world’s largest computer
services company, in October sold $4 billion of bonds in its biggest
offering, Bloomberg data show. Microsoft, the world’s largest software
maker, plans to sell top-rated senior unsecured bonds in an inaugural
offering, according to a Nov. 20 regulatory filing that clears the way
for the company to issue debt at any time.Technology companies have
sold about $20 billion of bonds so far this year, compared with $15.1
billion last year and $5.35 billion in 2006, Bloomberg data show. The
extra yield investors demand to own the debt has more than tripled to
5.11 percentage points from 1.62 percentage points on Dec. 31,
according to Merrill’s U.S. Corporates, Technology & Electronics
index.“Most technology companies have stronger balance sheets than your
general industrial, but that’s because the business risk associated
with these companies is much higher,” Farina said.Earnings
Hewlett-Packard
acquired EDS in August to expand its services business, helping boost
sales last quarter for the combined company by 19 percent, according to
a Nov. 24 statement. Hewlett-Packard plans to use proceeds from the
bond offering to repay commercial paper that helped finance the
purchase, the person said. The computer maker said it had $7.4 billion
of commercial paper outstanding as of Oct. 31.The new notes will be
rated A2, the sixth grade of investment quality, by Moody’s Investors
Service, and an equivalent A by Standard & Poor’s, the person
said.Hewlett-Packard hired Bank of America Corp., Credit Suisse Group,
Morgan Stanley, Deutsche Bank AG, Merrill Lynch & Co. and Royal
Bank of Scotland to manage the offering.Hewlett-Packard last
month reported a 10 percent increase in personal computer sales to
$11.2 billion in its fiscal fourth quarter, beating some estimates, as
demand for laptops offset declining printer sales in a slowing economy.
Hewlett-Packard redesigned its best-selling notebooks and pursued
budget-minded shoppers with a new line of mini-portables priced below
$400.Overall sales rose to $33.6 billion. Without the purchase of
Plano, Texas-based EDS, sales gained 5 percent. Net income fell 2.4
percent to $2.11 billion, or 84 cents a share, from $2.16 billion, or
81 cents, a year earlier, the company said Nov. 24. -
AuthorDecember 3, 2008 at 10:28 AM
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