Dell Bonds Rally as Company Announces Debt Buybacks
(Bloomberg) -- Dell Technologies Inc.'s bonds rallied on Monday, after the software and computer company said it will buy back older securities in a move expected to cut future interest expenses.
Risk premiums on the company's 8.35% notes due July 2046 tightened 0.20 percentage point from Dec. 2 levels to 1.98 percentage point over Treasuries as of 2:10 p.m. in New York. That's closer to the level the company will pay to buy back the securities as part of a larger tender offer that will total as much as $2.5 billion.
Dell is also selling $2.25 billion of new notes on Monday, the proceeds of which can be used for purposes including buying back bonds in the latest tender offer. The company has broadly been cutting debt levels and reducing its interest expenses this year, which has helped it return to investment-grade ratings. The sale priced in two parts: $1 billion of 20-year notes due 2041 for 155 basis points over Treasury notes of comparable maturity and $1.25 billion 30-year notes due 2051 at 170 basis points over Treasuries.
“The combination of improving profitability -- driving trailing 12-month adjusted Ebitda of $13.1 billion -- with a commitment to debt reduction, has improved Dell's leverage and rating prospects,” Bloomberg Intelligence credit analyst Robert Schiffman wrote in a note dated Monday.
“Though the pace of deleveraging may slow, it should continue, while the risk of fallen-angel status dissipates,” he said adding that “bond spreads and credit-default swaps may tighten even further.”
Dell this year spun off its stake in VMWare Inc., which has helped the company raise cash to pay down debt. Dell's 2016 acquisition of VMware's parent, EMC Corp. helped the computer maker to branch out its business from personal computers but left it with a heavy debt load.
©2021 Bloomberg L.P.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
