Broadcom Inc recently borrowed $5 billion on the U.S. investment-grade bond market in order to refinance a portion of the loans it had taken out for its $69 billion acquisition of VMware Inc. The company sold the debt in three parts, with the yield on the longest tranche being 0.95 percentage points compared to government bonds. This move comes more than seven months after Broadcom completed its acquisition of VMware and nearly a year after securing up to $28.4 billion in new debt commitments to finance the purchase.
The committed financing was divided into three parts: a $10.7 billion A-2 credit facility, a $10.7 billion A-3 credit facility and a $7 billion A-5 credit facility. The company will use the proceeds from the bond sale to prepay a portion of the A-2 loans and for general corporate purposes, leaving at least $23.4 billion of debt to be refinanced.
Analysts predict that Broadcom will see growth in its AI revenue, with expectations of $11 billion to $12 billion in revenue by 2024, rising to $14 billion to $15 billion by 2025. Broadcom’s stock has shown significant growth, gaining over 100% in the last 12 months. Investors can participate in the stock through options like Invesco QQQ Trust, Series 1 QQQ and SPDR-S&P 500 SPY. At the time of reporting, AVGO shares were trading 0.24% higher at $1,751.43.
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