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Photographer: David Paul Morris\/Bloomberg <\/p>\n Photographer: David Paul Morris\/Bloomberg <\/p>\n
(Bloomberg) — Salesforce Inc. saw lukewarm appetite for its $25 billion bond sale amid concerns over its debt-funded share buyback and broader worries about software companies\u2019 exposure to artificial intelligence.<\/p>\n
The company, which makes software that corporations use to track and manage their relationships with clients, drew a final order book of $36 billion on Wednesday, according to people with knowledge of the matter, or about 1.4 times the deal\u2019s size.<\/p>\n
Most Read from Bloomberg<\/p>\n
That tally is a far cry from the $126 billion of demand for Amazon.com Inc.\u2019s $37 billion bond offering earlier this week. It\u2019s also well below orders equal to about 4.1 times the notes offered for sales this year on average, according to Bloomberg-compiled data.<\/p>\n
The software firm sold bonds in eight parts, with maturities ranging from two to 40 years, the people said, asking not to be identified because details are private. Pricing on the longest part of the deal tightened by just 0.1 percentage point to 1.85 percentage point above Treasuries \u2014 while similar deals have narrowed by an average of 0.3 percentage point this year, the data show.<\/p>\n
The stark contrast in demand underscores how Salesforce has become a poster child for Wall Street\u2019s concerns about the impact of AI on established vendors. Amazon is among the technology behemoths known as hyperscalers that are seen as benefiting from the billions they\u2019re pouring into their AI operations.<\/p>\n
\u201cThe hyperscalers are building the infrastructure that is creating the existential threat to companies like Salesforce,\u201d said Christian Hoffmann, a portfolio at Thornburg Investments. \u201cInvestors are increasingly taking a hard look at software companies and their own software exposure, and this deal is not insubstantial at $25 billion.\u201d<\/p>\n
Big Shift<\/p>\n
Salesforce is also tapping AI tools as a growth engine. However, the company\u2019s stock has lost more than a quarter of its value this year, and investors have demanded wider spreads over Treasuries to buy its existing notes.<\/p>\n
Still, revenue 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.<\/p>\n
Story Continues <\/p>\n
A debt-funded buyback is \u201ca material shift in financial policy, including a higher tolerance for debt in the capital structure,\u201d Moody\u2019s Ratings said Tuesday as it downgraded Salesforce by one level to A2. S&P Global Ratings, meanwhile, lowered its outlook to negative.<\/p>\n
The deal\u2019s size doesn\u2019t change S&P\u2019s view on the credit, Tuan Duong, an analyst at the firm, said Wednesday.<\/p>\n
There are \u201copportunities and risks for Salesforce,\u201d the analyst said, referring, for example, to the company\u2019s focus on an AI-powered tool called an agentic enterprise platform. \u201cIt\u2019s just super early and over time, based on their growth and their strategy and the agentic enterprise platform, they can continue to be relevant in the age of AI.\u201d<\/p>\n
For Thornburg\u2019s Hoffman, shorter maturities from Salesforce\u2019s issue were appealing.<\/p>\n
\u201cWe actually view the front end as reasonably attractive and a profoundly different risk than say, the 30- or 40-year debt,\u201d he said.<\/p>\n
When Salesforce last tapped the US bond market in 2021, it raised $8 billion to help finance its acquisition of Slack, according to Bloomberg-compiled data.<\/p>\n
Representatives for Salesforce, Bank of America Corp. and Citigroup Inc., among the banks managing the offering, didn\u2019t immediately respond to a comment request. Wells Fargo & Co., JPMorgan Chase & Co. and Barclays Plc, also participating in the deal, declined to comment.<\/p>\n
–With assistance from Caleb Mutua, Michael Gambale and Yash Roy.<\/p>\n
(Updates with pricing, adds comments.)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"Photographer: David Paul Morris\/Bloomberg (Bloomberg) — Salesforce Inc. saw lukewarm appetite for its $25 billion bond sale amid…\n","protected":false},"author":3,"featured_media":650287,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21],"tags":[691,738,3638,25615,16264,246298,158,67,132,68],"class_list":["post-650286","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-bloomberg","tag-percentage-point","tag-salesforce","tag-software-companies","tag-technology","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116216278920925036","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/650286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=650286"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/650286\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/650287"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=650286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=650286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=650286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}