Broadcom to tap corporate bond market for funds to pay down debt

By Ciara Linnane

Chip maker is planning to issue three-year, five-year, seven-year and 10-year bonds

Broadcom Inc. is planning to tap the investment-grade bond market on Thursday with a four-part deal that will help it repay some of its outstanding debt.

The semiconductor company (AVGO) last issued bonds in July, when it raised $5 billion to refinance loans taken on to pay for its $69 billion acquisition of VMware Inc.

Bondholders were bracing for the new paper by selling outstanding bonds to make room for the new ones, and spreads were moving wider, as the following charts from data-solutions provider BondCliQ Media Services show.

The company is planning to issue three-year, five-year, seven-year and 10-year bonds via underwriters JPMorgan, TD Bank and Truist Securities, according to a regulatory filing. The bonds carry a Baa3 rating from Moody's Ratings and a BBB rating from S&P Global Ratings.

Broadcom has more than $53 billion worth of outstanding bonds, according to FactSet.

The next chart shows the movement in spreads since Wednesday, as highlighted by the yellow arrow. Spreads have tightened over the past three weeks but moved wider once the deal was announced.

The company's maturity stack shows the bulk of its outstanding bonds mature in 2029, although it has more than $1 billion coming due in 2025 and more than $4 billion in 2027.

Broadcom's shares were flat Thursday but have gained 58% in the year to date, while the S&P 500 SPX has gained 20%.

See more: Broadcom boosts AI revenue outlook, but stock falls after mixed earnings

-Ciara Linnane

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09-26-24 1219ET

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