The company sold $400 million in three-year notes which mature on June 15, 2012. The 3.375% coupon priced at $99.932, with an implied yield to maturity of 3.399%. The spread was a ‘mere’ 150 basis points over Treasuries.
Dell also sold $600 million worth of notes that are 10-year maturities for June 15, 2019. The coupon there was 5.875% with a price of $99.933 and an implied yield to maturity of 5.884%. The spread there was 195 basis points over Treasuries.
What is important to see here is that the bond ratings are investment grade, but they are not Triple-A rated. S&P has an “A-” and Moody’s has an “A2” designation.
These spreads might not be quite as tight as what Microsoft Corporation (NASDAQ: MSFT) recently sold debt at, but Microsoft has a much higher corporate debt rating.
If these note sales had come out in February or March, you would have likely seen spreads well north of 500 basis points over Treasury equivalents. These bond spreads are still higher than the historic levels seen through most of the last decade, but there is more and more evidence that the healing process is coming full-circle in the corporate debt markets.
Jon C. Ogg
June 10, 2009
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