Broadcom bonds tighten as Symantec acquisition stalls


By William Hoffman

NEW YORK, July 15 (IFR) - Broadcom bonds tightened as much as 15bp on Monday as concerns over downgrade risks subsided following reports that the chip maker's planned acquisition of cybersecurity company Symantec had stalled.

Merger talks ceased after Symantec said it would not accept any less than US$24 per share, according to CNBC. At that price the company was valued at some US$18bn.

With the deal on the ropes, bonds tightened in the secondary.

Broadcom's 3.625% 2024 and 4.25% 2026 were the company's most actively traded bonds on Monday morning, narrowing 10bp and 12bp, respectively, according to MarketAxess data.

The back and forth of the negotiations have proven to be a roller coaster ride for Broadcom's bond spreads.

The 2024s widened about 35bp to 193bp over US Treasuries in the days following news of merger talks early this month, only to tighten back to T+174bp on Monday.

Failure to complete the deal would be another loss for Broadcom after the Trump administration blocked its US$117bn bid last year to buy competitor Qualcomm.

Since then Broadcom shifted its focus to software with its US$18.9bn acquisition of CA Technologies, which was funded with an US$11bn bond deal in March that garnered order books of US$25bn.

But the issuance did not perform well in the secondary amid complaints from investors about razor-thin pricing and a lack of a step-coupon to hedge against a downgrade to junk.

This article appears in: Fundamental Analysis , World Markets , Stocks , Technology , Bonds
Referenced Symbols: AVGO ,

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