eBay Inc. (EBAY) said Thursday it was planning to offer its first ever corporate bond issue in the U.S. high-grade market.

The deal was announced on the heels of the online-auction site's third quarter earnings, which topped analysts' expectations. The company reported late Wednesday its third-quarter income rose 23%, fortified by the stellar performance of its Internet payments provider, PayPal.

The payment service added more than a million new accounts monthly and ended the third quarter with 90 million active accounts, eBay said in a statement. eBay's core business hasn't performed as well as its PayPal or Bill Me Later units.

Preliminary price guidance suggests a risk premium of 45 basis points over Treasurys on the three-year tranche; 60 basis points on the five-year tranche and 80 basis points on the 10-year piece.

Comparable debt includes Microsoft's (MSFT) 4.50% bonds due 2040, that recently traded at 82 basis points over Treasurys and its 3.00% bonds due 2020, last quoted at a risk premium of 46 basis points over Treasurys, according to MarketAxess.

eBay has been considered "pretty mature" by investors, with its PayPal business "the only thing sexy about the company right now," according to Lawrence Glazer, managing partner at Mayflower Advisors in Boston.

The $1.5-billion three-part offering will include three-, five-, and 10-year maturities and has been rated A2 by Moody's Investors Service and A by both Standard & Poor's and Fitch Ratings.

The company plans to use proceeds from the offering for general corporate purposes, which could include acquisitions, working capital, and share repurchases. The company, which has a market capitalization of about $34 billion, also said its board approved another $2 billion in stock buybacks in order to offset dilution from its stock-compensation programs. eBay bought back $300 million of its common shares in the third quarter.

In addition to eBay, several other cash-rich tech companies, including Dell (DELL) and Seagate Technology (STX), have been rumored to be leveraged buyout candidates.

"It is not clear that they need the money for anything other than a possible acquisition, and maybe that's part of a defensive strategy," Glazer said. He noted that merger and acquisition activity has picked up in the tech sector as bond issuance is very attractive, fueled by solid demand and historically low borrowing rates.

Earlier this week, Wal-Mart Stores Inc. (WMT) sold three- and five-year notes that boasted the lowest coupons recorded in a corporate bond sale on those specific maturities. Wal-Mart's three-year was sold with a 0.75% coupon, and its five-year was priced with a coupon of 1.5%. Those rates clearly underscore that even companies with stellar credit have money that needs to be put to work.

eBay could not be immediately reached for comment.

The new issue is expected to be sold later this session via joint bookrunners Bank of America Merrill Lynch, Citigroup (C) and J.P. Morgan Chase (JPM).

Rival internet retailer Amazon.com (AMZN) is scheduled to release its third quarter earnings report after the close of business on Thursday.

-By Kellie Geressy-Nilsen; Dow Jones Newswires; 212 416-2225; kellie.geressy@dowjones.com
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