Chipmaker Nvidia seeks to raise over $25B in first bond deal since 2021

Nvidia, the prominent chipmaker, is gearing up to issue $25 billion in investment-grade debt this coming Monday, marking its first bond sale in five years. This significant move is seen as a gauge of investor interest in the burgeoning AI sector. The offering will consist of seven distinct bond segments, featuring maturities that range from two to thirty years, according to sources familiar with the matter. The bond issuance was increased from an initial $20 billion due to overwhelming demand, with orders exceeding $85 billion by early afternoon in New York. In light of this strong interest, the anticipated yield for the 10-year bonds is now projected to be 0.5 percentage points above US Treasuries, a reduction from the earlier estimate of 0.75 percentage points. Market conditions are favorable for Nvidia, particularly following the recent US-Iran deal, allowing the company to raise funds at relatively low costs. Lauren Wagandt, a portfolio manager at T Rowe Price, commented on the matter, stating, "It’s a very high-quality company at the end of the day, and it doesn’t come to the market as often as the other tech names." This bond issuance comes at a crucial time as tech companies are racing to secure funding amidst a competitive landscape fueled by AI investments. Nvidia, being a key player in the semiconductor industry and a major benefactor of the tech sector's substantial spending on AI infrastructure, is seizing this opportunity. The company indicated that it plans to utilize the proceeds from this bond sale for various corporate purposes, including the repayment and refinancing of existing notes. Once completed, this bond offering will more than triple Nvidia's current debt, raising it from approximately $8.5 billion to around $30 billion. This sale is notably three times larger than the company’s previous bond sale in 2021, during which it raised about $5 billion amid the challenges posed by the coronavirus pandemic.