Microsoft offers benchmark bond for LinkedIn buy

Microsoft is selling a seven-tranche US dollar benchmark bond to finance its acquisition of LinkedIn.
Microsoft is selling a seven-tranche US dollar benchmark bond to finance its acquisition of LinkedIn. PHOTO: REUTERS

NEW YORK (REUTERS) - Computer giant Microsoft is selling a seven-tranche US dollar benchmark bond Monday to finance its acquisition of LinkedIn, one of the banks managing the deal told IFR.

The bond has maturities of between three and 40 years, and all tranches are fixed.

One broker expects the deal to be US$15 billion (S$20 billion) in size.

The deal comes in what is anticipated to be a busier than usual August for the US high-grade bond market as issuers pull forward issuance to grab ultra-low borrowing costs while they can - and avoid volatility connected to a looming US rates hike and the presidential election.

Like Microsoft, which reported quarterly results last month, other corporates are expected to come to market as they emerge from their earnings blackout periods.

Microsoft announced the US$26.2 billion acquisition of LinkedIn -its biggest-ever deal - in mid-June. It said it would finance the acquisition primarily with debt.

Analysts at the time said that even a bond as large as US$20 billion would be small in comparison to Microsoft's roughly US$400billion market cap, and that investors would be keen to buy paper from one of the few remaining Triple A rated companies.

Bank of America Merrill Lynch, JP Morgan and Wells Fargo are active bookrunners on the new bond offering. Goldman Sachs, Citigroup, HSBC and Barclays are passive bookrunners.