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Google launches first corporate bond deal, taking advantage of low rates

May 16, 2011 | 11:01 am

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Internet giant Google is doing something it has never done before: It's turning to the corporate bond market as investment-grade borrowing costs hover at historically low levels.

The planned $3-billion sale is similar to moves made by other large-cap tech companies including EBay and Microsoft taking advantage of low borrowing rates.

BGC Partners analyst Colin Gillis said it's essentially "close to free money" for Google, which held total cash and market securities of $35 billion at year's end but keeps much of it offshore. As of March 31, Google's foreign subsidiaries held $16.9 billion of the company's cash and marketable securities.

"We plan to use the proceeds to repay outstanding commercial paper and for general corporate purposes," a Google spokesman said in a written statement. He declined further comment.

Google, whose shares have slipped 9% this year, is likely to use the proceeds for further expansion, including acquisitions under the aggressive new leadership of Chief Executive Larry Page who replaced Eric Schmidt in April.

Google set aside $500 million to potentially resolve a U.S. Justice Department investigation of its advertising business, resulting in lower first-quarter profit.

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-- Jessica Guynn

Photo: Attendees chat at the Google IO Developers Conference in San Francisco on May 11, 2011. Credit: Marcio Jose Sanchez

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