Keysight Technologies’ $750M Bond Offering: A Strategic Move Amid Regulatory and Market Crosscurrents

Keysight Technologies’ recent $750 million issuance of 5.350% senior unsecured notes due 2030 underscores its financial agility in a challenging macroeconomic environment. The bond, which closed on April 17, 2025, comes amid a backdrop of rising U.S. tariffs, regulatory scrutiny for cross-border acquisitions, and the company’s push to expand its footprint in high-growth markets like 5G and AI. Here’s what investors need to know.

The Bond’s Terms and Purpose

The notes carry a coupon of 5.35%, paid semi-annually, with principal due July 30, 2030. With an underwriting discount of $4.5 million, Keysight netted $743.7 million. Proceeds will fund “general corporate purposes,” including potential financing for its pending acquisition of Spirent Communications, a deal valued at $1.46 billion when announced in March 2024. The Spirent acquisition, which requires regulatory approvals, aims to bolster Keysight’s position in network testing and cybersecurity—critical as global 5G and AI infrastructure expands.

Credit Ratings: Investment-Grade, but Outlooks Diverge

Fitch Ratings affirmed Keysight’s long-term issuer default rating at BBB+ (stable outlook), assigning the same rating to the notes. S&P Global upgraded its outlook to positive, maintaining a BBB rating for the issuer. While both agencies acknowledge Keysight’s strong cash flows and disciplined capital management, Fitch’s stable outlook reflects lingering risks, such as the Spirent deal’s uncertain timeline and geopolitical headwinds. The absence of a Moody’s rating for the bond—a dash in the Cbonds database—remains a minor red flag, though the BBB+ and BBB ratings from Fitch and S&P respectively position the notes as solid investment-grade debt.

Key Risks: Tariffs, Regulatory Delays, and Leverage

The SEC filing highlights several risks. First, U.S. “reciprocal tariffs” on imports from China, Taiwan, and the EU—effective April 2025—could pressure Keysight’s supply chain and margins. Second, the Spirent acquisition, already delayed pending regulatory clearances, faces hurdles in markets like China, where scrutiny of foreign tech acquisitions has intensified. Third, while the bond’s senior unsecured status ranks equally with existing debt, its subordination to secured obligations could weigh on holders in a liquidity crunch.

Keysight’s leverage, though manageable at ~2.0x net debt/EBITDA post-issuance, could rise if the Spirent deal closes without debt reduction. Investors should monitor the company’s Q2 2025 earnings for updates on EBITDA trends and regulatory progress.

Market Context: A Prudent Move in a High-Yield World

At 5.35%, the notes’ yield is attractive in an environment where the 10-year Treasury yields ~3.8% and BBB-rated corporate bonds trade at ~4.5%. This spread reflects both Keysight’s creditworthiness and investor demand for fixed income amid equity market volatility. However, the 2030 maturity exposes holders to inflation and rate risks if the Fed’s terminal rate holds above 5%.

Conclusion: A Balanced Bet on Tech Infrastructure

Keysight’s bond issuance is a calculated move to capitalize on long-term trends in 5G, AI, and cybersecurity, while hedging against near-term risks. The BBB+ rating and stable outlook from Fitch suggest the company’s fundamentals remain robust, with its $3.8 billion in 2024 revenue and 18% operating margin serving as anchors. Yet investors must weigh the 5.35% yield against execution risks for the Spirent deal and geopolitical headwinds.

For income-focused investors, the notes offer a solid return for moderate credit risk. For equity holders, the bond underscores Keysight’s confidence in its strategic vision—even as it navigates regulatory thickets and trade tensions. The $743.7 million raised provides a financial cushion, but the true test lies in whether Keysight can convert its acquisition ambitions into sustained growth.

In short, this bond is a vote of confidence in Keysight’s leadership in tech infrastructure—a sector with long tailwinds—though not without speed bumps along the way.