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Nvidia ups bond plan
Nvidia will raise $25 billion through a U.S. bond issuance, more than initially planned, as it taps the debt market to increase liquidity, Reuters reported on Monday.
“By Saeed Azhar, Tatiana Bautzer and Zaheer Kachwala June 15 (Reuters) – Nvidia will raise $25 billion through a U”
Reuters said investor demand for the bond sale hit $85 billion and that the bond consists of seven tranches of notes, maturing as late as 2056, according to a term sheet seen by Reuters.
The Los Angeles Times said the deal, priced on Monday, attracted as much as $85 billion of orders or more than three times the size of the bond, citing a person with knowledge of the matter.
The Los Angeles Times also reported that Nvidia’s first offering since 2021 was boosted from an initial target of about $20 billion, underscoring strong investor demand.
Terms, pricing, and use
Reuters reported that the bond offering was capped at $25 billion to keep low credit spreads and that the main reason was to establish a liquid benchmark for its cost of credit rather than to fund capital expenditures.
The Los Angeles Times said Nvidia sold notes in seven parts with maturities ranging from two to 30 years, and that the yield on the longest portion tightened by 0.25 percentage point to 0.65 percentage point more than Treasuries as orders swelled.
CNBC reported Nvidia disclosed plans for the capital raise in an SEC filing on Monday without including the dollar amount, while sources said the debt sale could end up closer to $25 billion.
In the Los Angeles Times, Nvidia’s proceeds were described as being used for refinancing outstanding debt and other purposes, and the paper said the deal was marketed without the investor calls that banks typically hold before investment-grade bond sales.
AI funding and market ripple
Reuters said Nvidia has not accessed the investment grade bond market in five years, previously raising $5 billion in June 2021, and it reported that Goldman Sachs, J.P. Morgan and Morgan Stanley are the bookrunners.
“Nvidia (NVDA) stock is extending gains on Monday after the artificial intelligence (AI) behemoth revealed plans of raising at least $20 billion via a seven-tranche bond offering — its first since 2021”
The Los Angeles Times said Nvidia is spending heavily to support firms that will help build demand for AI, including a $5 billion stake in Intel, investing as much as $10 billion in Anthropic PBC, and contributing $30 billion to a massive funding round for OpenAI.
CNBC reported that Nvidia has about $7.5 billion in long-term debt and another $1 billion in short-term debt, and it said Nvidia’s shares rose 3.5% on Monday and are up about 14% this year.
Ars Technica said the issuance was upsized from $20 billion after receiving more than $85 billion in orders by early afternoon in New York, and it quoted Lauren Wagandt, a portfolio manager at T Rowe Price, saying, "It’s a very high-quality company at the end of the day".
