Amgen Sells $5 Billion of Convertible Notes

Investors lined up Tuesday to lend money to biotechnology giant Amgen Inc., and the company obliged them.

Thousand Oaks-based Amgen said it sold $5 billion of convertible notes, $1 billion more than it had planned to issue when it announced the note sale Monday.

“Investor demand was what warranted the additional $1 billion,” company spokesman Dan Whelan said.

Another sign of that demand: Amgen is paying rock-bottom interest rates on the notes -- just 0.125% a year on the half of the notes maturing in 2011, and 0.375% on the other half maturing in 2013.

Amgen said it expected to use $3 billion of the proceeds to buy back stock.

The company in December said its board authorized spending as much as $5 billion to repurchase stock. That was in addition to $2 billion remaining under a previous buyback authorization.

Companies often buy back shares when they believe their stock is undervalued. They also do so to offset the issuance of shares that occurs when employees exercise stock options.

Convertible notes are securities that are convertible into a set number of the issuing company’s shares. The advantage to the company is that the interest rate on the notes typically is low.

For investors, convertible securities offer the potential to reap a capital gain if the company’s stock price rises over time, boosting the value of the shares underlying the securities.

Amgen shares rose 79 cents to $71.93 before the deal terms were announced Tuesday.

-- Tom Petruno