By Mike Cherney
Actavis PLC sold $21 billion in bonds on Tuesday and lowered the
yields on the deal, reflecting strong investor demand for a bond
that ranks as the second-largest corporate offering on record.
The bond sale, which will help pay for the pharmaceutical
company's $66 billion acquisition of health-care firm Allergan
Inc., was announced on Monday and had already received about $90
billion in orders from investors, according to a person tracking
the sale.
The Actavis sale is the latest sign of a booming market for new
bond issues. Underscoring that point, Exxon Mobil Corp. announced
plans to sell $7 billion in new bonds on Tuesday morning.
A 10-year Actavis bond was priced to yield 3.843%, or 1.75
percentage points more than benchmark U.S. Treasurys. That is on
the lower end of guidance released earlier Tuesday and lower than
the yields suggested on Monday.
Earlier Tuesday, underwriters on the debt indicated the yield on
10-year bonds would be 1.80 percentage points more than Treasurys,
give or take 0.05 percentage point. On Monday, a 10-year bond was
being shopped to yield roughly 2.00 percentage points.
Lower yields indicate higher prices, and mean the company
issuing the debt pays less in interest. Underwriters will typically
lower yields if they receive many orders from investors on the
bonds.
Analysts expected the Actavis deal to meet with strong demand,
given that rates are still relatively low on safe government debt.
The company's bond sale spanned 10 tranches, with maturities
ranging between 18 months and 30 years.
The largest corporate-bond offering on record was Verizon
Communications Inc.'s $49 billion bond sale in September 2013.
Write to Mike Cherney at mike.cherney@wsj.com
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