Salesforce Weakly Priced $25B Bond with Spreads at 1.85%, Moody’s Cuts Rating
Salesforce drew peak orders of $50B for its $25B eight-part bond sale, but spreads tightened only 0.1 percentage point to 1.85% over Treasuries, signaling weaker demand versus peers. The company unveiled a $50B buyback, 5.8% dividend hike and received a one-notch A2 downgrade from Moody’s on higher leverage.
1. Bond Sale Draws Tepid Demand
Salesforce launched an eight-part bond offering to raise $25B with maturities from two to 40 years, attracting peak orders of $50B. Spreads tightened by only 0.1 percentage point to 1.85% over Treasuries, below this year’s average 0.3-point tightening and trailing recent Amazon orders.
2. Funding Share Buybacks and Dividend Increase
Proceeds from the debt sale will fund a $50B stock buyback program and support a 5.8% dividend hike announced last month, marking a significant capital return to shareholders financed through leverage.
3. Credit Rating Impact
Moody’s downgraded Salesforce one notch to A2 and S&P placed the rating outlook on negative review, citing the shift toward higher debt tolerance and potential risks to the company’s capital structure.