Verizon Communications Inc. is back in the bond market Monday,
shopping debt to investors in what will likely be its largest U.S.
sale since its mammoth $49 billion bond deal in September.
The telecommunications giant is looking to refinance up to $8.2
billion in debt that comes due between 2016 and 2018, though the
final size of Monday's sale is still to be determined. The sale
comes several weeks after Verizon closed on its $130 billion
acquisition of Vodafone Group PLC's stake in Verizon Wireless.
Orders for Monday's bond sale topped $15 billion by midmorning,
according to people familiar with the matter. The bond deal could
ultimately be between $4 billion and $5 billion, these people
said.
Verizon's $49 billion deal in September, the largest corporate
bond sale on record, helped finance the acquisition of Vodafone's
stake. In February, Verizon sold roughly $5.4 billion worth of debt
denominated in euros and sterling, also to help finance the
acquisition.
In January, Verizon sold $500 million in bonds in the U.S., in a
deal geared toward individual investors. Monday's sale is directed
at institutional investors, such as pension funds, insurance
companies and mutual funds.
In selling bonds Monday, Verizon is taking advantage of interest
rates that remain relatively low, and is likely looking to reduce
interest costs on its outstanding debt, one investor said. Analysts
still expect interest rates to rise later this year, but for now,
benchmark 10-year Treasurys are yielding about 2.79%, down from
about 3% at the end of 2013.
Bond yields and prices move in opposite directions.
The Verizon sale comes after investment-grade companies sold
roughly $48 billion in debt last week, the second-busiest week on
record by value and behind only the week in September when Verizon
sold its $49 billion bond.
Verizon is looking to sell the bonds Monday in five parts, with
fixed-rate debt maturing in 5.25, seven, 10 and 20 years, and a
floating rate portion that will also mature in 5.25 years. The
10-year portion could yield around 1.55 to 1.60 percentage points
more than comparable Treasurys.
That would be a better price for Verizon than where it sold
10-year bonds, maturing in 2023, in September. At that time, the
debt was priced to yield 2.25 percentage points more than
Treasurys. But Verizon had to offer more yield on the debt in
September because of the sheer size of the sale. High-grade
corporate bond prices have also rallied since then.
The 2023 bonds recently traded to yield 1.35 percentage points
more than Treasurys, according to MarketAxess.
Katy Burne contributed to this article.
Write to Mike Cherney at mike.cherney@wsj.com
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