NEW YORK, Jan 16 (IFR) - Pfizer unit Zoetis on Wednesday
drew strong demand for its debut bond offering, a $3.65 billion
four-part deal that attracted an order book of about $30 billion
and allowed it to sharply tighten pricing from original
guidance, according to market sources.
The company, which develops and makes animal health
medicines and vaccines, built the order book within hours of
announcing the deal.
That in turn allowed it to tighten guidance by 30-45 basis
points from initial price guidance.
"The response to this transaction seems to show that even
though the underlying tone is cautious in the high-grade market,
there is still demand for new names with a growth story," said
A number of factors seem to have supported the Baa2/BBB-
rated company's first ever bond offering.
The deal comes at a time when Zoetis is in the process of
finalizing a $2 billion initial public offering, expected to
launch in the next few days and price before month-end,
according to several sources.
JP Morgan, BofA Merrill Lynch and Morgan Stanley are leading
Pfizer will exchange Zoetis Class A shares with affiliates
of the underwriters for outstanding indebtedness of Pfizer. The
underwriters would then sell the shares in the offering and
they, and not Zoetis or Pfizer, will receive the proceeds.
After the offering, Pfizer has said it may make a tax-free
distribution to its shareholders of all or part of its remaining
equity stake in Zoetis.
With revenue of $4.2 billion for the year ended December 31
and products sold in more than 120 countries and across eight
core species and five major product categories, Pfizer says
Zoetis is the world's biggest animal health and vaccines
The pre-IPO bond transaction entails Zoetis selling three-,
five-, 10- and 30-year bonds. Initial price talk was for
Treasuries plus 125 basis points on the three-year, plus 150bp
on the five-year, plus 175bp on the 10-year and plus 205bp on
These levels were tightened and the bond sizes set at $400
million of three-years at plus 80bp; $750 million of five-years
at plus 115bp; $1.35 billion of 10-years at plus 145bp; and
$1.15 billion of 30-years at plus 175bp.