What About Hewlett Packard Bonds?


By Michael Terry, CFA – Seeking Alpha

August 27, 2012

On Thursday, I wrote an article on Cisco System’s (CSCO) bonds, recommending fixed income investors look at the 2019s and that income investors look at the equity. Now I find myself writing yet another article on a technology company – Hewlett Packard (HPQ).

The motivation for this was reading the various articles written about HP on Seeking Alpha. The majority of articles written in response to the company’s earnings (here, here and here) saw the decline as a value opportunity, while the majority of comments were decidedly negative on the company. The articles and the comments lead me to the question: what about the bonds?

I decided to look for an answer in the difference between HP’s bonds and the bonds of Dell (DELL) and versus the communication and technology sector spreads.

Versus Dell

First, how HP’s five year debt compares to Dell’s similar maturity bonds:

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