“Books will be an absolute blowout,” one portfolio manager told IFR. “Everyone wants a piece of this. It’s a glamorous name to have.”
Led Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley, the deal is the first offering from the internet giant since it debuted with a US$3bn offering of three, five and 10-year notes in May 2011.
The feeding frenzy is being made all the fiercer by the fact that the proceeds will likely be used for the repayment of the company’s outstanding US$1bn 1.25% May 2014s.
Initial price thoughts have started out at T+75bp, and investors are expecting it will price at least 10bp tighter than that by the end of the day.
“I‘m thinking 65ish, just inside Microsoft’s 10-year spreads,” said one investor.
Comparables include its Aa2/AA rated 3.625% May 2021s at T-3bp and G+49bp and a dollar price of US$106.00.
Microsoft, rated higher at triple-A, has a 3.625% December 2023 trading at T+65bp or G+74bp. IBM, rated Aa3/AA-, has 3.625% February 2024s at G+90bp.
Triple-A rated Johnson & Johnson is another possible comparable, with its 3.375% December 2023s trading at T+45bp or G+74bp.
The Google leads an onslaught of corporate offerings today, with Eli Lilly, Whirlpool and Medtronic all in the market with offerings.