[NEW YORK] Intel Corp is planning to sell bonds to refinance debt due this year and a portion of notes maturing in 2017, the company said in a regulatory filing on Thursday.
The world's biggest chipmaker may offer US$2.75 billion debt in as many as three parts, according to a person familiar with the matter. The longest portion would be US$1.25 billion of 30-year notes that may yield 1.55 percentage points to 1.6 percentage points above comparable government debt, said the person, who asked not to be identified because the information isn't public.
That's down from initial discussions of 1.7 per centage points. Bank of America Corp and JPMorgan Chase & Co are managing the sale.
Credisights Inc analysts Erin Lyons and Peter Boozan maintained their equivalent of a hold recommendation on Intel's debt in a note reviewing the offering on Thursday. They recommended that investors looking for stable A-rated core holdings buy the bonds.
"Intel is one of the best-run semiconductor companies, and we like that management has maintained a conservative financial profile," they wrote. "We believe the bonds are priced fairly and we do not expect to see meaningful price appreciation."
S&P Global Ratings gave the bonds an A+ grade, according to a statement on Thursday.
Intel is the latest US blue-chip company to offer notes in what's poised to be second-busiest week for issuance this year.
In its last multibillion-dollar deal, Intel sold US$7 billion of bonds in July to finance part of its US$16.7 billion takeover of Altera Corp. The company plans to repay its US$1.5 billion of 1.95 per cent notes due in October and a portion of the US$3 billion of 1.35 per cent bonds due next year.
Investment-grade companies have sold more than US$41 billion worth of bonds so far this week as they take advantage of low borrowing costs after posting earnings for the quarter ended March 31.
Companies are also front-loading issuance before the summer slowdown, according to Ben Emons, a money manager at Leader Capital Corp in Los Angeles.
"I think they take the window of opportunity right here to say, 'Now it's OK, liquidity's back, so let's just issue as much as we can and sell into the demand,' Mr Emons said. "By July, things will get worse."