Dell (DELL.US) plans to issue $4 billion investment-grade bonds The AI server boom helped strengthen credit fundamentals, and stock prices have soared 340% during the year

According to people familiar with the matter, Dell plans to issue bonds for four terms this time, ranging from 3 to 10 years. At present, the final distribution scale has not been determined and may be adjusted according to market demand. Among them, preliminary pricing discussions suggest that the yield of the longest-term bond may be up to 1.4 percentage points higher than that of US Treasury bonds over the same period.

The funds from this bond issuance will mainly be used to repay outstanding bonds due in 2026, while the rest of the funds will be used for general corporate purposes.

Dell is one of the world's leading manufacturers of server and data center equipment. Since this year, as global technology companies are building AI infrastructure on a large scale, demand for AI servers and related computing equipment has grown rapidly, and Dell has become an important beneficiary of this round of capital expenditure boom.

Driven by this, Dell's stock price has surged a cumulative total of about 340% since this year. Earlier this month, the company raised its sales forecast for the current fiscal year by 25 billion US dollars, greatly exceeding analysts' expectations, further highlighting the strong growth momentum brought about by AI server demand.

Currently, Dell is receiving a large number of orders for servers equipped with Nvidia (NVDA.US) artificial intelligence chips, and demand is picking up in the traditional server business.

Notably, demand for central processing units (CPUs) used in traditional servers is regaining momentum. With the rapid development of AI agent applications, CPUs play an increasingly important role in managing and coordinating AI agent tasks, which further expands the scope of Dell's benefits from the AI infrastructure investment cycle.

The bond issuance was jointly underwritten by Barclays Bank, Bank of America, Citigroup, Goldman Sachs, HSBC, J.P. Morgan Chase, Toronto Dominion Bank, and Wells Fargo.

Bloomberg industry research analyst Robert Schiffman said that this bond issuance is expected to further strengthen Dell's already stable credit situation, and the AI business is driving the company's operating performance to record levels. Schiffman pointed out that Dell currently has sufficient financial space to refinance upcoming debts and further enhance shareholder returns while maintaining a medium BBB-grade credit status.

Dell's financing comes at a time when the issuance of US investment-grade bonds is heating up again. After a brief lull in late summer, a large number of companies re-entered the bond market to seek financing. According to an informal survey by traders, it is expected that about 17 companies plan to issue bonds on Wednesday, including medical device manufacturer Smith & Nephew, Blue Owl Credit Income, Canadian telecommunications company Rogers Communications, and US utility company Southern. Many companies plan to use the current market window to refinance existing debts.