UPDATE 1-EBay sells $1.5 bln of debt in debut deal

(Adds detail, background)

By Andrea Johnson

NEW YORK, Oct 21 (BestGrowthStock) – EBay Inc (EBAY.O: ) on Thursday
joined an elite group of borrowers to issue debt at record low
rates, suggesting demand for corporate debt remained high.

The Internet commerce company, which on Wednesday posted
better-then-expected quarterly profit and forecast stronger
holiday earnings, issued its first-ever bonds, selling $1.5
billion of debt in a three-part sale.

The sale included $400 million of three-year notes that
priced at a coupon of 0.875 percent, according to IFR, a
Thomson Reuters service.

Wal-Mart Stores Inc (WMT.N: ) earlier this week sold
three-year notes with a record low coupon of 0.75 percent.

EBay’s issue tied for second-lowest coupon with recent
issues by Microsoft Corp (MSFT.O: ) and PepsiCo Inc (PEP.N: ),
which also carried coupons of 0.875 percent.

Debt issuers are selling bonds as demand for corporate and
other debt continues, helped by massive flows into bond funds.

“There’s huge demand for spread product, everyone’s looking
for yield, ” said Mirko Mikelic, senior portfolio manager at
Fifth Third Asset Management in Grand Rapids, Michigan.

“If you even have an inclination of wanting to put debt on
your balance sheet, or refinance, now’s definitely the time to
do it. It’s at historic lows.”

Few technology companies need to borrow money in the fixed
income market as many generate a lot of cash, he said.
Microsoft, for example, has a cash pile of about $37 billion,
although much of that is overseas and may be subject to tax if

“The Fed is on hold in terms of rates at least till the
second half of next year, so its going to be a great time to
issue if you need to come to market,” said Mikelic. “Even if
the need may not be immediately there. It’s amazing.”

EBay Chief Financial Officer Bob Swan made reference to
capitalizing on historically low U.S. interest rates in the
company’s earnings call.

“While we had a strong balance sheet, we only had $915
million in the U.S. at the end of the third quarter. As such,
we’ve announced a series of steps that we believe will enable
us to leverage our strong offshore cash position more
effectively and maintain the flexibility to capitalize on M&A
opportunities in both the U.S. and abroad, while redistributing
excess cash to shareholders,” he said.

As part of that plan, eBay’s board approved the creation
of a commercial paper program of up to $1 billion to fund a
portion of “Bill Me Later” receivables. The board also approved
the issuance of up to $1.5 billion in term debt financing.

The second tranche of Thursday’s deal, $600 million of
5-year notes, priced at a coupon of 1.625 percent. That places
it in the top two of the Thomson Reuters Data/IFR Historical
Low Coupon Tables.

Wal-Mart’s recent 5-year sale achieved a record coupon of
1.50 percent. EBay’s sale is tied with a 5-year sale by

EBay also sold $500 million of 10-year notes at a coupon of
3.25 percent. Johnson & Johnson tops the 10-year table with a
2.95 percent coupon, followed by Microsoft at 3.00 percent,
Raytheon at 3.125 percent, PepsiCo at 3.125 percent and
Raytheon at 1.625 percent.

(Additional reporting by Christopher Reich, Karen Brettell
and Ciara Linnane; Editing by Padraic Cassidy)

UPDATE 1-EBay sells $1.5 bln of debt in debut deal