Industry Updates

'SAMENA Daily' - News

Verizon plans $6.15 billion bond deal to refinance

Verizon Communications Inc. is selling $6.15 billion of bonds to take advantage of some of the lowest borrowing costs in more than a year.

The largest US wireless carrier reduced yields on its proposed debt offering, according to a person with knowledge of the deal, who asked not to be identified because the terms are private. A $1.5 billion 30-year portion may now yield about 1.9 percentage points above Treasuries, down from an initial offer of 2.15 percentage points and about 0.1 percentage point less than where Verizon’s 30-year bonds issued in 2013 trade.

“There’s just demand coming from everywhere,” said Tim Doubek, a money manager at Columbia Threadneedle. “It’s really wide open for companies to do what they want to do. I don’t think they even need to think about what this is going to cost.”

Demand for bonds of blue-chip American companies, such as Verizon, is getting a boost as investors flee negative rates in Europe and Japan. The extra yield above Treasuries investors demand to hold US dollar investment-grade bonds dropped to 1.47 percentage points on Tuesday, the lowest level since June 2015, according to data compiled by Bloomberg.

Verizon will use the notes to refinance $2.25 billion of floating-rate debt that matures in September, according to a company filing on Wednesday. Proceeds will also be used for general corporate purposes, including financing acquisitions. The company announced plans on Monday to acquire Yahoo Inc.’s internet business for $4.83 billion.

Bank of America Corp., Deutsche Bank AG, Goldman Sachs Group Inc. and Mizuho Financial Group Inc. are managing the bond sale, according to the filing.

In a note reviewing the deal, Creditsights analysts led by Chris Ucko maintained their equivalent of a hold rating on Verizon’s debt, saying the Yahoo acquisition would be “more or less a drop in the bucket for” the New York-based phone carrier and any new borrowings to fund the takeover wouldn’t alter the company’s capital structure. Verizon had a debt load of $99.7 billion as of the quarter ended June 30.



Source: http://gulfnews.com/business/sectors/markets/verizon-plans-6-15-billion-bond-deal-to-refinance-1.1869871

ATTENTION