AT&T taps bond market for first time this year

Wed Mar 5, 2014 12:34pm EST

NEW YORK, March 5 (IFR) - Any concerns about AT&T's desire to expand abroad didn't stop the telecom giant from attracting about US$6bn of demand on Wednesday morning for its first bond deal so far this year.

Bookrunners Bank of America Merrill Lynch, Goldman Sachs and Wells Fargo Securities closed the books at 11:30am, having garnered more than enough interest for the offering of five-year fixed and floating rate notes as well as AT&T's first 10-year offering since 2012.

The last time the company came to market was in November last year, when it issued US$400m of five-year floating rate notes maturing in November 2018 at 3mL+91bp, and US$1.6bn of 2.375% fixed-rate securities with the same maturity date.

The new deal includes a benchmark five-year, rated A3/A-/A and whispered at 85-90bp, and a 10-year with initial price thoughts at 135-140bp.

Comparables include AT&T's outstanding 1.4% November 2018s trading at T+60bp, or G+71bp; and Verizon's Baa1/BBB+/A- September 2018s, trading at T+60bp or G+80bp.

The new 10-year's whispers compare with AT&T's outstanding 2.625% December 2022s at T+98bp or G+120bp; and Verizon's 2.45% February 2022s at T+105bp or G+128bp; and its 5.15% September 23s at T+130bp or G+138bp.

AT&T was heavily rumored last year to be interested in buying Vodafone Plc. Rumors have swirled in the markets in the past week that it might also be considering cable assets in Europe.

British law required AT&T to respond to rumors last year that it was contemplating a purchase of Vodafone.

It said it wasn't pursuing such a deal, but analysts have interpreted that to mean that AT&T didn't want to rush a merger.

"The decision means that the company cannot acquire Vodafone over the next five months unless it obtains the approval of the Vodafone board," said Dave Novosel, strategist at Gimme Credit.

"But we suspect that Vodafone is still under consideration."

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