Nov. 9 (Bloomberg) -- Cisco Systems Inc., the world’s largest maker of networking equipment, plans to sell $5 billion of notes in its third debt offering since going public in 1990, according to a person familiar with the offering.

The issue will consist of $500 million of 5-year notes, $2.5 billion of 10-year securities and $2 billion of 30-year bonds, which may be sold as soon as today, said the person, who declined to be identified because terms aren’t set.

Cisco has bought about 130 businesses in its 25-year history, using them to enter new markets, such as cable set-top boxes and home wireless routers. Chief Executive Officer John Chambers last week said the company will “aggressively invest” to enter new markets with acquisitions and with product development.

“While Cisco has a strong net cash position, much of its cash is offshore,” said Jeff Evenson, a senior analyst with Sanford C. Bernstein & Co. in New York. Cisco uses debt issuance “to sustain buybacks and to complete U.S.-based acquisitions such as Starent Network Corp.,” he said in an e-mail.

Cisco last week reported $35.4 billion in cash and cash equivalents as of Oct. 24, the end of its first quarter. Most of those funds are overseas, Cisco said. The San Jose, California- based company said it had $4.7 billion in the U.S., compared with $5.9 billion at the end of the previous quarter.

Spreads to Treasuries

The 5-year notes may price to yield about 67 basis points more than similar-maturity Treasuries, the 10-year securities may pay a 100 basis-point spread and the 30-year bonds may price to pay about 130 basis points, according to the person.

Proceeds will be used for general corporate purposes, which may include stock buybacks, repayment of debt and acquisitions, Cisco said today in a filing with the U.S. Securities and Exchange Commission. The filing didn’t disclose the size or maturities of the planned issue.

John Earnhardt, a spokesman for Cisco, didn’t comment beyond what was included in the filing.

Bank of America Merrill Lynch, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc and JPMorgan Chase & Co. are underwriting the transaction, according to Cisco’s filing.

Cisco last sold debt in February when it issued $4 billion of 10- and 30-year bonds, according to data compiled by Bloomberg.

The sale was split between $2 billion of 4.95 percent 10- year notes that priced to yield 200 basis points more than U.S. Treasuries of similar maturity, and $2 billion of 5.9 percent 30-year bonds that priced at a spread of 225 basis points over Treasuries, according to Bloomberg data. A basis point is 0.01 percentage point.

Cisco sold bonds for the first time in February 2006, when it issued $6.5 billion of fixed- and floating-rate debt to finance its acquisition Scientific-Atlanta, a maker of television set-top boxes.

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

Last Updated: November 9, 2009 15:05 EST