Verizon’s Debt Order Book Set To Surpass Apple At $49 Billion

By Mani
Updated on

Verizon Communications Inc. (NYSE:VZ) order book on multi-tranche bonds is set to touch $49 billion emphasizing demand for top quality debt instruments.


Verizon Communications Inc. (NYSE:VZ)’s sale is set to surpass the $17 billion offering by Apple Inc. (NASDAQ:AAPL) in April, making it the biggest corporate-bond sale.

Bonds to finance Vodafone deal

As reported earlier, Verizon Communications Inc. (NYSE:VZ) confirmed on September 2 that it has reached a deal with Vodafone group to acquire Vodafone Group Plc’s 45 percent stake in Verizon for $130 billion. The deal includes 50 percent of the price paid in cash and the remaining 50 percent paid in Verizon stock. The deal is expected to be closed in the first quarter of 2014.

The multi-tranche bonds are being issued to finance a buyout of the remaining 45 percent stake in its wireless operations from Vodafone Group PLC.

Multi-tranche bond offering

Verizon Communications Inc. (NYSE:VZ)’s bond deal offering consists of eight tranches, including two floating rate notes with three- and five-year maturities and six fixed rate tranches with maturities of three to thirty years. The initial price thoughts on the fixed rate tranches were set between 165 bps and 265 bps over Treasuries for maturities varying between three and thirty years.

Encouraging response

Earlier, Verizon Communications Inc. (NYSE:VZ)’s underwriters led by JP Morgan Chase, Morgan Stanley anticipated it would take about a year for Verizon to garner $40 to $50 billion in the bond market.

Amid enthusiastic response, the underwriters are scheduled to price the deal Wednesday.

According to Matt Dutch, a portfolio manager at Calvert Investments, investors are clamoring for the bonds in part because they are being offered at much cheaper prices than where Verizon’s outstanding debt had been trading.

Verizon’s bond deal expansion shows some of the large companies are eager to sell debt ahead of a meeting next week by the Federal Reserve, where it is believed the central bank will reduce its monetary stimulus, resulting in higher interest rates.

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