Broadcom Lines Up Biggest Debt Financing Ever for Qualcomm

Broadcom has lined up as much as $106 billion of debt financing to back its proposed acquisition of Qualcomm, winning what would be the biggest corporate loan on record at a precarious time for credit markets, according to Bloomberg.

As much as $100 billion of the funding would be provided by a group of 12 lenders including Bank of America and JPMorgan, Broadcom said in a statement, a record loan financing. The banks provided a firm commitment to fund the deal, a step up from their previous agreement that allowed them to back out if markets were seizing up.

Now banks appear to be on the hook for the funding if the deal goes through, just as credit markets are showing early signs of strain. The U.S. junk bond markets just had their worst week in two years, and investment-grade corporate debt has been weakening all year. Broadcom is rated one step above speculative grade.

The financing package includes $100 billion of bank loans, including a $5 billion revolving credit facility. The other banks providing the debt commitment are: Citigroup, affiliates of Deutsche Bank, Mizuho Financial Group, Mitsubishi UFJ, Sumitomo Mitsui Financial Group, Wells Fargo, Bank of Nova Scotia, Bank of Montreal, and Royal Bank of Canada and Morgan Stanley.

A group of investment funds affiliated with Silver Lake, KKR & Co. and CVC Capital Partners, agreed to include $6 billion of convertible note financing, Broadcom said in its statement.

The previous record for a loan was set by Anheuser-Busch InBev in 2015 when it raised $75 billion to back its acquisition of SABMiller. That loan was then repaid via further debt raisings, largely in the bond market.