Investors who bought into Dell Inc.’s $20 billion bond deal this week are already being rewarded.
The notes sold by Round Rock-based Dell Inc. on Tuesday gained more than $300 million on Wednesday in New York, according to data compiled by Bloomberg.
The biggest rise was on Dell Inc.’s 30-year bonds, which offered a coupon exceeding 8 percent. Demand for the offering outstripped bonds on offer by more than four times.
The increased bond offering is a boost for Dell Inc.'s efforts to complete its $67 billion takeover of data storage giant EMC Corp. got a boost with the increased bond offering, easing its way toward lining up the rest of the debt needed to seal the deal. The company was able to lower the interest it had to pay on the notes by as much as 0.75 percentage point on some of the debt, Bloomberg data show.
Its $2 billion of 30-year bonds climbed as high as 103.5 cents on the dollar on Wednesday after pricing the day before at 99.92 cents, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Creditsights Inc. analysts led by Erin Lyons maintained their equivalent of a buy rating on the bonds in a note to investors, saying they expect the debt to continue to outperform.
“Demand will likely remain high over the near term and after the initial flipping settles, as Dell bonds offer a meaningfully higher yield than one can find in most other investment-grade names,” they wrote.
Dell Inc., the largest private employer in Central Texas, in October announced it was planning to buy Hopkinton, Mass.-based data storage company EMC Corp. for $67 billion in what would be the the biggest information technology deal in history.
Since then, Dell Inc. took cybersecurity business unit SecureWorks public and announced that it is selling its IT services division, known as Dell Services, to NTT Data Corp. in a $3 billion deal.
Last week, Dell Inc.'s reported that revenue in its first quarter was $13.2 billion, a 2 percent decline from the same period a year ago, according to preliminary figures released by the company late Friday. As part of Dell's efforts to buy publicly traded EMC Corp., it is required to disclose information about its finances. The company said its operating loss shrank to $100 million from $300 million in the same period a year ago.
Additional material from Bloomberg news service.
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