IBM has sold $1 billion of debt which was due in January 2016.
That’s according to data compiled by Bloomberg, which obtained the notes from IBM four months after the company sold $1.5 billion of debt due 2013 at the lowest interest rate on record at the time.
It’s reported that returns on the investment-grade debt have declined seven basis points to 3.989 percent since IBM’s previous debt sale at the beginning of August. In fact, according to Bank of America Merrill Lynch’s US Corporate Master Index, returns fell as low as 3.53 percent in November, which was apparently the lowest yield since the index began in October 1986.
“The offering is very tight even for a high investment- grade offering and shows the strength of demand within the credit markets right now,” Guy LeBas, an income strategist, told Bloomberg in a telephone interview. “There’s a lot of high-quality cash chasing limited investment opportunities right now.”
Moody’s Investors Service had upgraded the senior unsecured rating of IBM’s debt one level to Aa3 from A1 last month. It said this was due to a growing emphasis on higher-margin software and services.
This could be down to the company’s move from a server-production-based company to a service-based company, which has helped with its credit improvement.
And IBM, which has completed 16 acquisitions this year and ended Q3 with more than $11 billion in cash and short-term investments, claims it plans to spend around $20 billion on acquisitions by 2015.
This apparently is in a bid to almost double operating earnings per share and it is predicted that head honcho Sam Palmisano will do this by pinning hopes on analytics software and services as well as cloud computing.