Broadcom Issues $5B in Debt To Fund VMware Acquisition

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

The software developer sold debt in three parts, Bloomberg cites a familiar source.

After initial talks, the longest tranche yields 0.95 percentage points over Treasuries, approximately 1.25 percentage points above Treasuries.

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

Broadcom split the committed financing into three parts: a $10.7 billion A-2 facility, a $10.7 billion A-3 facility, and a $7 billion A-5 facility. The company will use the proceeds from the sale to prepay a portion of the term A-2 loans under its term loan credit agreement and for general corporate purposes, leaving at least $23.4 billion of debt still needing refinancing.

Analysts forecast Broadcom will generate $11 billion – $12 billion in AI revenues in 2024, increasing to $14 billion – $15 billion in 2025.

Broadcom stock gained over 100% in the last 12 months. Investors can gain exposure to the stock via Invesco QQQ Trust, Series 1 QQQ, and SPDR S&P 500 SPY.

Price Action: AVGO shares traded higher by 0.24% at $1,751.43 at the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image: Broadcom