Broadcom Issues $5 Billion in Debt to Fund VMware Acquisition – Broadcom (NASDAQ:AVGO)

Broadcom Inc AVGO on Monday, it borrowed $5 billion on the U.S. investment-grade bond market to refinance some of the loans secured for its $69 billion acquisition of the company VMware Inc.

Bloomberg cites a well-known source, citing a software company that sold the debt in three parts.

Following initial talks, the longest tranche offers a yield 0.95 percentage points higher than the yield on Treasury bonds and about 1.25 percentage points higher than the yield on Treasury bonds.

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The planned debt sale comes more than seven months after Broadcom completed its acquisition of VMware and nearly a year after the company secured $28.4 billion in new debt commitments to fund the purchase.

Broadcom has divided the committed financing into three parts: $10.7 billion in the A-2 Credit Facility, $10.7 billion in the A-3 Credit Facility and $7 billion in the A-5 Credit Facility. The company will use the proceeds from the sale to repay a portion of the A-2 Term Loans under the Term Loan Agreement and for general corporate purposes, leaving at least $23.4 billion of debt that still requires refinancing.

Analysts forecast Broadcom will generate $11 billion to $12 billion in AI revenue in 2024, rising to $14 billion to $15 billion in 2025.

Broadcom stock has gained more than 100% in the past 12 months. Investors can gain exposure to the stock through Invesco QQQ Trust, Series 1 QQQAND SPDR S&P500 SPY.

Reduction: AVGO shares were up 0.24% at $1,751.43 at last trade on Tuesday.

Reservation: This content was prepared in part using AI tools and was reviewed and published by Benzinga editors.

Image: Broadcom