It was the biggest such debt sale since January, according to Dealogic, and the largest test of investor demand since the collapse of Bear Stearns a little over two weeks ago.
NEW YORK (Reuters) - Oracle Corp <ORCL.O>, the world's No. 3 software maker, sold $5 billion of bonds on Wednesday, taking advantage of strong demand for corporate debt as worries about the global financial crisis eased.
It was the biggest such debt sale since January, according to Dealogic, and the largest test of investor demand since the collapse of Bear Stearns a little over two weeks ago.
Fewer debt deals have been getting done this year with the corporate bond market under pressure amid concerns about the weak U.S. economy. Investment-grade debt sales plunged 31 percent in the first quarter to $185 billion, according to Thomson Financial.
Prior to the Oracle offering, the largest corporate bond sale was a $6 billion deal from General Electric's <GE.N> GE Capital Corp. on January 8, according to Dealogic.
!ADVERTISEMENT!The Oracle deal appeared to go well, with order books closing quickly after it was announced, said Mirko Mikelic, portfolio manager for Fifth Third Asset Management in Grand Rapids, Michigan.
The offering came at a good time as a rally in corporate bonds in recent days boosted demand for new issues.
Sentiment has improved in the corporate bond market since the Federal Reserve orchestrated a rescue of troubled investment bank Bear Stearns <BSC.N> and made financing available to brokers through its discount window, analysts said.
"People are starting to feel better -- that the economy is not going to go under and the financial system is not going to collapse," Mikelic said. "There may be a recession, but it's not going to be deep and long."
Oracle is better positioned than some technology companies because its revenues come from businesses and not consumers, who so far seem to be driving the slowdown in the U.S. economy. Moreover, as a business software maker, a significant portion of its profits comes from recurring maintenance revenues from contracts that in some cases are signed several years in advance.
"But they're still subject to the economy if businesses put off purchasing technology, so there still are some effects," Mikelic said.
He said he passed on the offering because he is trying to position his portfolio defensively in light of economic weakness.
The Oracle offering came amid a wave of new corporate debt sales after successful capital-raising by Lehman Brothers Holdings <LEH.N> earlier this week assuaged fears of more financial firm meltdowns.
Oracle is raising the money as it prepares to close its $8.5 billion cash purchase of smaller business software maker BEA Systems Inc <BEAS.O>.
Oracle, whose products include databases, programs that help computers communicate with each other and software that handles accounting, human resources and banking operations, planned to raise the cash through a three-part debt sale, said joint lead manager Credit Suisse.
Last week the company forecast that quarterly new software sales will climb 10 percent to 20 percent from a year ago in the period ending May 31.
The debt sale included $1.25 billion of five-year notes yielding 2.22 percentage points more than U.S. Treasuries, $2.5 billion of 10-year notes yielding 2.15 percentage points over Treasuries, and $1.25 billion of 30-year bonds yielding 2.12 points more than Treasuries.
Citigroup and Morgan Stanley are also joint lead managers.
(Reporting by Jim Finkle in Boston, Pam Niimi and Dena Aubin in New York; Editing by Leslie Adler)
