Salesforce Kicks Off Eight-Part US High-Grade Bond Offering

Salesforce Inc. kicked off its first US investment-grade bond sale since 2021 to fund a share buyback, testing investor appetite for software-sector debt.

The firm is marketing an eight-part bond, with maturities ranging from two to 40 years, according to a person with direct knowledge of the matter. Initial price talk on the longest part of the deal is 1.95 percentage points above Treasuries, the person added, asking not to be identified because details are private.

Salesforce, the leading maker of customer relationship management software, is planning to raise at least $20 billion from the offering, Bloomberg previously reported.

Read More: Salesforce Plans to Raise Up to $25 Billion to Fund Buybacks

The software firm has become a poster child for Wall Street’s concerns about the impact of artificial intelligence on established vendors — even as it is also tapping AI tools as a growth engine. The company’s stock has lost 26% this year, and investors have demanded wider spreads over Treasuries to buy its existing notes.

Still, revenues and profits are seen rising this year, according to analyst estimates compiled by Bloomberg, and Salesforce last month announced a $50 billion stock buyback program and 5.8% dividend increase alongside a better-than-expected sales forecast.

A debt-funded buyback is “a material shift in financial policy, including a higher tolerance for debt in the capital structure,” Moody’s Ratings said Tuesday as it downgraded Salesforce by a notch to A2. S&P Global Ratings, meanwhile, lowered its outlook to negative.

The company last tapped the US bond market in 2021, when it raised $8 billion to help fund its acquisition of Slack, according to Bloomberg-compiled data.

Wells Fargo & Co., Bank of America Corp., Barclays Plc, Citigroup Inc. and JPMorgan Chase & Co. are managing the sale.