Intel (INTC) issued $6.5 billion in bonds on Monday, attracting approximately $50 billion in subscription orders, reflecting strong market confidence in the company’s turnaround and transformation prospects. The proceeds from the bond issuance will be used to repurchase part of Intel’s equity in an Irish chip factory that it had previously sold.
In recent years, due to persistent deterioration in profitability, Intel’s credit rating has slipped from A grade to BBB, just a few notches above junk status. However, the pricing of this bond issue was set at just 0 to 0.05 percentage points above Intel’s existing bonds, a relatively small premium, indicating strong market demand. The subscription multiple for this issuance was approximately 7.7 times the offering size, compared with an average market multiple of about 4 times so far this year.
Improving Performance and AI Opportunities Drive Stronger Sentiment
In 2025, the U.S. government acquired an equity stake in Intel through a nontraditional, White House-led transaction. Last week, Intel issued a sales forecast that significantly exceeded Wall Street expectations, sending a clear signal of corrective recovery. Investors are increasingly optimistic that the company has finally seized the opportunity presented by the surge in artificial intelligence (AI) spending, and the company’s stock price has reached an all-time high.
According to a person familiar with the bond offering, Monday’s issuance had been in preparation for some time, and the recent positive performance added momentum. Investor confidence in Intel’s recovery prospects is also evident in the credit derivatives market. The cost of insuring against an Intel bond default has declined this month: On Monday, the annualized rate for five-year credit default swaps was approximately 0.6 percentage points, down from about 0.85 percentage points at the end of March.
Use of Proceeds and AI Chip Demand
The proceeds from the bond issuance will be used to support Intel’s $14.2 billion repurchase of Apollo Global Management’s (APO) 49% stake in the Fab 34 joint venture in Ireland. The private equity firm acquired the stake in 2024 for $11.2 billion. At the time, Intel stated that the cash from the transaction would be used for the development of new production technologies at that factory and other U.S.-based plants.
Demand for data center chips needed to support large-scale AI expansion is driving demand for Intel’s flagship Xeon server processors. These general-purpose central processing units (CPUs) are once again becoming a focal point for enterprises as they work to turn AI software into revenue-generating services.
The issuance was jointly underwritten by Citigroup (C), JPMorgan Chase (JPM), Barclays Bank (B), Bank of America (BAC), and Deutsche Bank (DB). Among the five tranches issued on Monday, the longest-dated tranche matures in 2066 and carries a yield of 1.3 percentage points above U.S. Treasuries, which is about 0.35 percentage points tighter than the initial price guidance. This issuance was the largest among the 12 senior bond offerings that day.