Off the hook

11 September 2013 By Richard Beales Follow @richardbeales1

Bond buyers are piling into the telco’s record $49 bln debt sale. A 10-year yield above 5 pct and an investment-grade rating make it appealing. A big part of the lure, though, is the creation of a supersized, super-liquid benchmark. It’s an offer that just can’t be refused.

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Verizon Communications launched a $49 billion eight-tranche bond on Sept. 11 that will partly finance the $130 billion buyout of its wireless operations from Vodafone, setting a new record for the largest ever corporate bond.
The final size was at the top end of the $45-$49 billion range that market sources expected following demand in excess of $100 billion. That eliminated the need for the company to tap the euro and sterling market, as originally planned, IFR reported.
The bond issue will partly refinance a $61 billion one-year bridge loan Verizon secured to fund the Verizon Wireless acquisition. The rest of the bridge will be replaced with about $12 billion of three and five-year term loans.
The deal eclipses Apple’s $17 billion offering in April, currently the largest corporate bond issue on record.

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