Moody’s gives A1 to Qualcomm debt

Moody's Investors Service said it assigned an A1 rating to Qualcomm Inc.’s proposed senior unsecured debt offering, the proceeds of which will be used to fund the acquisition of NXP Semiconductors NV (parent of NXP BV, which has a Ba1 corporate family rating currently under review for upgrade) and for general corporate purposes.

The outlook is stable.

Qualcomm announced on Oct. 27, 2016 an agreement to acquire NXP in an all cash deal. Both boards approved the transaction, which, subject to regulatory approvals and other closing conditions is expected to close in calendar 2017. Qualcomm has received U.S. regulatory clearance and has filed in Europe and China, with the EU provisional deadline to rule on the acquisition set on June 9.

Qualcomm intends to finance the deal with offshore cash balances and $11 billion in debt financing. The company already has a $4 billion committed delayed draw term loan in place and plans to issue $10-12 billion of bonds to fund the remainder of the acquisition and for general corporate purposes.

Moody's said it estimates Qualcomm's pro-forma gross adjusted debt to EBITDA will be just over 3 times at closing and cash balances will remain over $6 billion as compared to $29 billion at March 2017.

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