Intel is set to debut its Kangaroo bonds to test the Australian finance appetite. Deutsche Bank and Westpac will be joint lead managers for the offering. Pricing details for the bonds will be out soon.
Intel to test Australian bond market
Similar to Apple, Intel has also opted for the same four- and seven-year tenure. In August, Apple used the offering successfully for its three-tranche print of A$2.25 billion ($1.58 billion) Kangaroos. Apple’s offering dwarfed all the previous Australian dollar offerings from non-financial companies, highlighting Australia’s underutilized fixed-income market. Before this, the biggest corporate Australian dollar bond offerings came from mining giant BHP Billiton, when it offered two A$1 billion trades.
Until now, Intel has issued only U.S. dollar bonds, so this will be the chip maker’s first offshore port offering. For Australia’s financial market, this represents another opportunity after Apple’s A$2.25 billion three-tranche trade issued a few months ago.
“Price guidance is 90bp area over asset swaps an three-month BBSW for Intel’s fixed-rate bonds and/or floating-rate four-year tranches and asset swaps plus 130bp area for the fixed-rate seven-year paper,” says Reuters.
All of Intel’s previous bond issues have been for $1 billion or more, so there are expectations that the chip maker’s inaugural Kangaroo trade will be of at least A$1 billion, says Reuters. After 2012, Intel returned to the domestic bond market in the third quarter to raise $8 billion. The offering was done to fund its $16.7 billion acquisition of Altera.
Making investors happy
Last week, Intel pleased investors by issuing a bright outlook for 2016 sales. Intel’s guidance shows signs of hope even amid the deteriorating PC market. For 2016, revenue is projected to rise by the mid-single digits, which meets analysts’ expectations of a 4% year-over-year growth.
Intel, which has been consistent in paying annual dividends, also raised its annual cash dividend by 8 cents to $1.04 per share or 8.3% from the last dividend payout. Its previous two hikes were 6.7% and 7.1%. The dividend will be paid in the in the first quarter of 2016. Intel also raised its capital spending guidance. From 2016’s previous $7 billion projection, the chip maker has raised its 2016 projection to $10 billion.
On Friday, Intel shares closed up 1.05% at $34.66. Year to date, the stock is down by over 4% while in the last one month, it is up by almost 1%.