As part of a bid to help finance the 2008 acquisition of Electronic Data Systems Corp., global computer manufacturer, Hewlett-Packard plans to raise 2 billion dollars. In order to do this, the company plans a unique sales opportunity.
It is estimated that the sale will include $750 million of two-year floating-rate notes, $1 billion of two-year fixed-rate notes, and $250 million of debt that is due in August 2012 that also pays a fixed rate. At this point, the terms of the transaction are not set in stone, but it does provide a sound estimate of HP’s plans.
Those privy to more details report that Hewlett-Packard plans to use the proceeds from the offering for general corporate purposes, including payoff of the commercial paper that that provided primary funding for the $13.2 billion purchase of Electronic Data Systems the previous August.
One insider reported that Hewlett-Packard’s debt will receive a potential A rating by Standard & Poor’s with an A2 rating being offered by Moody’s Investors Service.
Additionally, Hewlett-Packard, a Palo Alto, California-based company, had made arrangements with three major financers to underwrite the bonds for the proposed sale. They include Bank of America, Morgan Stanley, and Suisse Group AG.
Back in February, the computer company sold a sizeable amount of debt. All told, it issued $2.8 billion of notes over the course of a three-part sale. The figures were first compiled by Bloomberg. The three-year notes would pay a 4.25% fixed rate and they will yield 295 basis points more than what would be issued by similar-maturity Treasuries. Then the two-year, 3% notes would float at around 175 basis points than three-month Libor.
Libor, which is a benchmark measurement of borrowing practices, currently holds a 0.66% rate, while the basis point is hovering at a 0.01 percentage point.
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