2:57 AM
Google enters the bond market
NEW YORK (CNNMoney) -- Google plans to raise cash by selling bonds for the first time in the company's history, the Internet search giant said Monday in a filing with the Securities and Exchange Commission.
Google (GOOG, Fortune 500) plans to raise $3 billion by selling $1 billion each of 3, 5 and 0-year notes. The world's largest search company respectively pegged interest rates at 1.25%, 2.13% and 3.63%.
The company said it plans to use the proceeds to fund "general corporate needs and to repay the company's outstanding commercial paper."
Credit rating agency Moody's gave the offering an investment grade 'Aa2' rating, citing "Google's substantial financial flexibility as well as its conservative financial philosophy."
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Google currently sits on $36 billion in cash and short-term securities. But a large part of that cash is tied up in overseas accounts, making it expensive to tap in the United States since Google would have to transfer and pay tax on the funds.
Google joins the dozens of other companies that have recently entered the fixed income market to take advantage of both low interest rates and strong investor interest for corporate bonds.
At 3.17%, the yield on the benchmark U.S. 10-year Treasury note is hovering near its lowest level for the year.
Citigroup (C, Fortune 500), Goldman Sachs (GS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) are acting as lead managers for the debt offering.
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