Dell Said to Consider Boosting $16 Billion Bond Offering for EMC

Dell Inc. is considering increasing the amount of debt it’s raising in the investment-grade bond market, potentially boosting a $16 billion offering by several billion dollars, according to a person with knowledge of the matter.

The computer maker would reduce other parts of the debt financing needed to fund its buyout of EMC Corp., said the person, who asked not to be identified without authorization to speak publicly.

Dell is seeking to take advantage of lower borrowing costs in the investment-grade debt market, where yields have fallen to the lowest in about a year, Bank of America Merrill Lynch Index data show.

In all, Dell is actually borrowing less to fund the takeover. It’s planning to raise about $43 billion, the person said. That’s less than the $49.5 billion financing the company said banks committed for the deal last year.

Dell will use less debt because it anticipates raising more cash from planned asset sales, the person said. Also, the company doesn’t plan to utilize the full amount under a proposed revolving credit line, the person said.

The computer-maker’s bond offering may be the biggest of the year after Anheuser-Busch InBev NV’s $46 billion bond deal in January that backed its purchase of SABMiller Plc.

Junk Debt

Dell may raise $3.25 billion of unsecured high-yield bonds, down from a planned $9 billion offering, the person said. The notes will be graded BB or the second-highest junk grade, S&P said in a statement Wednesday.

The investment-grade portion of the debt may price next week, according to another person with knowledge of the offering, who asked not to be identified without authorization to speak publicly. The longest part of that offering will be a 30-year bond. Bank of America Corp., Barclays Plc, Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the sale.

The company also expects to raise about $4.75 billion from institutional loan investors, down from an initially planned $8 billion, another person with with knowledge of the matter said earlier. To make up the difference, the company may increase the amount of loans that it syndicates to banks.

The company needs regulatory clearance and the approval of EMC’s shareholders before it can close the deal.

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