Investors are queuing up to finance Dell Inc.'s $67 billion acquisition of EMC Corp., with the computer maker poised to boost its offering for what's likely to be the year's second-biggest corporate bond sale.

The company had received more than $80 billion of orders from investors by the time its bankers closed the books on Tuesday, according to people familiar with the transaction who asked not to be identified because they aren't authorized to speak publicly. Dell had initially planned to raise about $16 billion. The company is weighing whether to increase the amount of debt it's raising in the investment-grade bond market, one person with knowledge of the matter said Monday.

Dell's bond sale may be the largest since Anheuser-Busch InBev NV sold $46 billion of bonds in January to finance its takeover of SABMiller Plc., and is expected to launch on Tuesday, said one of the people. The offering comes on the heels of the busiest week for bond sales by blue-chip companies in the U.S and Europe since January. Top-rated issuers sold about $74 billion in the five-day period ending May 13, according to data compiled by Bloomberg.

While Dell's proposed notes have been given the lowest investment-grade rating, the yields offered may entice investors who typically buy higher-rated junk bonds, said Matthew Duch, a money manager at Calvert Investments in Bethesda, Maryland, which has about $12 billion of assets under management

The longest part of the offering, debt maturing in 30 years, now may yield at least 5.875 percentage points above similar-maturity Treasuries, said another person familiar with the matter. While that's down from an offer of 6.25 percentage points, its still about three times the average spread on all U.S. corporate bonds of similar ratings and maturities, according to Bank of America Merrill Lynch data.

A proposed 10-year note may yield at least 4.375 percentage points above government debt, said the person. That's a premium of almost 1.7 percentage points over comparable debt. The debt was first marketed with a premium of 4.75 percentage points.

“You can capture some high-yield interest at these levels,” Duch said. “There's no doubt that it becomes more attractive.”

Creditsights Inc. analysts led by Erin Lyons rated the offering the equivalent of a buy in a note on Monday, saying the bonds offer “compelling value” compared to the debt of peers including HP Inc. and Hewlett Packard Enterprise Co.

Credit Concerns

“We think investors will be willing to overlook the credit concerns given the attractive yield, secured nature of the bonds, and coupon steps,” they wrote. “We sense investors have made room in their portfolios, expecting meaningful concessions.”

Moody's Investors Service assigned a Baa3 rating to the bonds last week. S&P Global Ratings graded the debt an equivalent BBB-. Dell also plans to sell $3.25 billion of unsecured notes in the high-yield market, according to S&P.

The deal is expected to price this week. Bank of America Corp., Barclays Plc, Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the sale.

Investors have been on the lookout for a host of debt offerings from Dell since the company said in October that banks had committed $49.5 billion of financing for the takeover. In April, the computer maker was close to placing a senior portion of the debt financing — $11 billion of term loans that were up-sized by $1 billion — through a syndicate of 24 banks, a person with knowledge of the matter said at the time.

Representatives for Dell didn't return requests seeking comment.

Bloomberg News

Instant Insights /

Dell Said to Get $80B of Demand on Bonds

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