By Mike Cherney
Actavis PLC launched a $21 billion bond sale Tuesday and lowered
the expected yields on the deal, reflecting strong investor demand
for a bond that should rank 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, expected to be completed Tuesday, 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 offered on Tuesday morning to yield
1.75 percentage points more than benchmark U.S. Treasurys,
according to the person following the deal. 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 is expected to include 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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