Cisco (CSCO) Raises 8B in Bond Offering

Shares of Cisco Systems Inc. (CSCO) closed down â " 0.01 or -0.05 percent on Monday to $22.12 per share. The company sold $8 billion in bonds yesterday in the largest debt offering this year and the largest by a publicly held company since Verizon Communications (VZ) issued a massive $49 billion in debt last September.

Yesterdayâ s offering was for debt with maturities between 18 months and 10 years, with both fixed and floating interest rates. Demand for the bonds was impressive, with banks and dealers taking over $20 billion in orders from investors.
San Jose, California based Cisco Systems Inc. is a multinational corporation involved in the design, manufacture and sale of Internet Protocol or IP networking equipment. Founded in 1984, the company has grown to become the worldâ s largest maker of computer network routers and switches and employs more than 75,000 people worldwide. The debt offering for seven series of senior unsecured notes is expected to close on March 3rd, 2014 and will include: $850 million to mature in September of 2015, with a floating rate 5 basis points over the LIBOR three month rate; $1 billion maturing March of 2017 with a floating rate 28 bps over the three month LIBOR rate; $2.4 billion maturing in March of 2017 with an annual interest rate of 1.10 percent; $500 million maturing in March of 2019, 50 bps over the LIBOR three month rate; $1.75 billion maturing in March of 2019 with an annual interest rate of 2.125 percent; $500 million maturing in March of 2021 with an annual interest rate of 2.9 percent and $1 billion maturing in March of 2024 with an annual rate of 3.625 percent. Cisco will use the proceeds to retire $3.75 billion in outstanding senior unsecured notes which become due next month. The offering will also help Cisco pay for the $15 billion in its own stock the company announced in November it would buy back. Cisco last issued debt in March of 2011. With the shorter maturities and variable rates in the current offering, Cisco is capturing a large market, with investors expecting rates to rise further as the economy comes out of recession. Last week, Cisco announced its second quarter earnings. The company reported a drop of -54.5 percent from the same period last year, mostly due to lower revenue. Nevertheless, earnings per share beat analyst estimates. CEO John Chambers noted that, â

Published on Feb 25, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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