Dell sells $3.25bn of junk bonds to finance EMC takeover

Bloomberg

Dell Inc. paid up to sell $3.25 billion of junk bonds that will help finance its takeover of EMC Corp., just as it did last month in a $20 billion offering of investment-grade debt.
The computer maker sold the longer part of its offering, $1.625 billion of eight-year bonds, for a yield of 7.125 percent, about 1.31 percentage points more than the average yield on U.S. corporate bonds of similar ratings and maturities, according to Bank of America Merrill Lynch data.
That’s down from initial talk of around 7.5 percent, said a person with knowledge of the matter who asked not to be named because the deal hadn’t been announced.
Dell also sold $1.625 billion of five-year bonds that yield 5.875 percent. JPMorgan Chase & Co., Credit Suisse Group AG, Bank of America Corp., Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., Deutsche Bank AG and Royal Bank of Canada managed the sale.
Moody’s Investors Service rated the bonds Ba2, two steps below investment-grade, the credit grader said in a statement on Monday. S&P Global Ratings assigned an equivalent BB rating to the debt last month.
The eight-year bonds traded at 101.5 cents on the dollar at New York and the five-year bonds traded at 101.75 cents, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority.
Dell sold $20 billion of investment-grade secured bonds at above-average yields last month.
The longest part of that offering, $2 billion of 8.35 percent 30-year bonds, paid 5.75 percentage points more than similar-maturity Treasuries, 3.55 percentage points more than the average spread on all U.S. corporate bonds of similar ratings and maturities, according to Bank of America Merrill Lynch.