Nvidia is preparing to launch its first corporate bond sale in nearly five years, aiming to raise a massive sum of at least $20 billion, according to a report. Bloomberg News reports that the world’s leading AI chipmaker is looking to capitalize on its popularity by tapping into the investment-grade debt market for the first time since June 2021, when it raised $5 billion.
Details of the Deal
Citing a preliminary regulatory prospectus filed with the US Securities and Exchange Commission (SEC), the report states that Wall Street heavyweights Goldman Sachs, JPMorgan Chase, and Morgan Stanley have been selected to manage the multi-billion-dollar offering. While final dollar amounts and interest rates will not be locked in until pricing is completed, early market discussions indicate that Nvidia is structuring the deal across seven different tranches of debt. These bonds will feature varying maturity periods ranging from two to 30 years, with due dates stretching between 2028 and 2056.
According to financial analysts, this is a strategic treasury maneuver. By launching this bond sale, Nvidia can pay off and replace its older, existing notes that are coming due. This will also help the company secure long-term, low-interest funding.
Comparison with Alphabet
Earlier this year, Google-parent Alphabet also sold bonds worth $20 billion in a seven-part offering that matures every few years, starting in 2029, and going all the way up to 2066. About three months later in May, Alphabet returned to the European debt market with a new multi-tranche bond offering of at least €3 billion (about $3.5 billion) across six tranches. The company said it plans to invest up to $190 billion in capital expenditures this year, largely in data centers supporting the development of AI.
The longest tranche in the current offering, maturing in 2063, is being discussed at around 205 basis points above midswaps, indicating investor expectations around risk and returns, Bloomberg noted.
