BRADENTON/NEW YORK: Google Inc hit the US bond market Monday with its high grade market debut, selling $3 billion of 3-year, 5-year and 10-year notes that take advantage of low borrowing rates. Proceeds of the SEC-registered deal will be used to repay commercial paper and for general corporate purposes, the company said in a statement. Citigroup, Goldman Sachs and JP Morgan are joint lead managers on the deal, which garnered an Aa2 rating from Moody's Investors Service, the third-highest rating in the agency's scale. Google is one of the few large-cap technology companies to actually have debt on its balance sheet - albeit at about $2 billion of commercial paper, a tiny sum compared to its $169 billion market cap. The company is the latest in a spate of new or rare technology company borrowers coming to the corporate bond market this year, as they look to take advantage of low interest rates and realize that having some debt makes sense. "We are seeing some of the large cap tech companies deciding that having debt on the balance sheets is an appropriate way of having a capital structure and running a company, which is relatively new to them," said one banker. "Generally most of these large cap tech companies have only used the debt markets to finance their acquisitions. They typically don't use the debt markets for anything else." Now, with rates so low and their own industries having reached a level of maturity, many are using the debt markets as a way of returning value to shareholders, at a time when they have large levels of cash trapped overseas. Microsoft, for instance, raised funds in the bond market in February in part to buy back shares, while Google is improving its debt profile by extending the maturity of its debt. Both have large levels of cash overseas. Cisco Systems in March sold $4 billion of three-year fixed and floating rate notes and six-year bonds; eBay in October last year sold $1.5 billion of three, five and 10 year notes. Google sold $1 billion of 3-year notes at 33 basis points over comparable Treasuries for a coupon of 1.25 percent. It sold another $1 billion of 5-year notes at 43 basis points over Treasuries.
