By Danielle Robinson and Michelle Sierra
NEW YORK/LONDON, Sept 3 (IFR/LPC) - Verizon
Communications could steal the record from Apple
for the biggest bond issue ever to hit the global markets in
coming weeks, as it begins the process of raising US$50bn of
bonds to pay for part of the US$130bn price take on the 45%
stake in Verizon Wireless that it is buying from Vodafone.
Sources in the corporate bond market said they were hearing
a US dollar deal is on its way and could be as big as US$20bn,
beating even the US$17bn multi-tranche offering by Apple in
Verizon will begin roadshowing a deal on September 9 and 10
in the US and then move to Europe for investor meetings from
Bookrunners for the roadshow are JP Morgan, Morgan
Stanley, Bank of America Merrill Lynch and
The first offering is expected to be just in dollars and
because of its size will include every possible tenor across the
yield curve, with floating rate tranches as well as fixed rate
portions at the shorter end.
The proceeds of the first deal will go toward paying down a
record US$61bn bridge loan, again by JP Morgan, Morgan Stanley,
Bank of America Merrill Lynch and Barclays.
The US$61bn 364-day bridge loan will be refinanced with a
permanent capital structure, consisting of US$49bn of corporate
bonds and US$12bn of three and five-year term loans. Verizon is
also raising an additional us$2bn revolver, but it is not
expected to be drawn, according to Thomson Reuters LPC.
Some of the US$61bn bridge loan may be drawn and funded as
Verizon may be unable to issue the full US$49bn of bonds by the
first quarter of 2014, when the underlying acquisition is
expected to close, due to the size of the deal.
In an 8K filing, Verizon stated the US$130bn would be paid
for in the form of US$58.89bn in cash, US$60.15bn in stock,
US$5bn of senior unsecured notes, the transfer of Verizon's
indirectly owned 23.1% interest in Vodafone Omnitel worth
US$3.5bn and US$2.5bn in assumed debt.
The 8K said Verizon has the right to increase the cash
portion of the purchase price by US$15bn if it wants. Verizon
CDS are 2.5bp wider at 85.5.
Verizon's cash bond spreads have barely reacted to the news,
indicating a receptive investor audience for the deluge of bonds
on the way.
Verizon 2.45% November 2022s were trading at 133bp bid
today, just 3bp wider than late last week and 8bp wider than the
125bp bid level before details of acquisition were leaked.
A widening of 8bp is considered negligible given the level
of bond issuance that Verizon is expected to do.