Hewlett Packard sounds out investors for US$9.5 billion debt deal

HEWLETT Packard Enterprise (HPE) is sounding out investors on Wednesday (Sep 11) for a potential US$9.5 billion debt package to help fund its acquisition of Juniper Networks.

The multinational information technology firm is holding calls with potential bond investors starting at 10 am New York time. JPMorgan Chase is coordinating logistics and a bond offering could follow. Any deal is expected to include US$6.5 billion of investment-grade unsecured bonds maturing in five to 30 years and a US$3 billion term loan, according to a company filing. The firm also priced US$1.35 billion of preferred stock on Tuesday, according to a statement.

A representative for HPE declined to comment on the proposed transaction.

A bond sale would be the latest to help fund acquisitions amid a deluge of issuance this year. Oneok sold US$7 billion of senior unsecured notes in six parts on Tuesday and gathered US$31 billion worth of orders. Last month, Kroger sold US$10.5 billion of notes to help pay for its takeover fellow grocer Albertsons in one of the biggest corporate bond deals of the year.

Borrowers are rushing to debt markets to lock in future financing needs before the US presidential election in November. And in anticipation that the Federal Reserve will cut interest rates later this month, the average yield for blue-chip firms to borrow at has fallen to the lowest in more than two-years.

HPE in January agreed to buy Juniper for US$14 billion in an effort to grow its presence in networking – technology that directs the flow of information between devices and across the Internet – that would double the size of that business, the company said. The deal was cleared by the UK’s antitrust watchdog and the European Union’s regulators last month. BLOOMBERG