NEW YORK (TheStreet) -- Shares of Cisco Systems (CSCO) are rising by 2% to $28.81 in Wednesday's afternoon trading session after the multinational technology company said today that it is planning to sell $5 billion in bonds to boost its equity, Bloomberg reports.
The maker of networking equipment intends to use proceeds for general corporate purposes, including the return of capital to shareholders through the repurchase of common stock and dividend payments.
Cisco will offer debt in five parts, with the longest maturity a $500 million 10-year note, yielding as much as 1.1% points more than comparable Treasuries, sources told Bloomberg.
However, the company has not yet released details, and said that actual terms of the notes, including interest rate, principal amount and maturity, will depend on market conditions at the time of pricing.
"Cisco's done well, and their investors expect them to return value to shareholders," said senior analyst at Bloomberg Intelligence John Butler. "The company is transitioning into the mature phase, and out of the growth phase, and as such investors expect more income."
Separately, TheStreet Ratings team rates CISCO SYSTEMS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate CISCO SYSTEMS INC (CSCO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity, reasonable valuation levels and increase in net income. We feel its strengths outweigh the fact that the company shows weak operating cash flow."