Record Bond Sale Announced

Verizon planning to issue $45 billion to $49 billion of bonds as soon as tomorrow, with possibility of additional debt denominated in euros, pounds, and/or yen.

Verizon Communications Inc. plans to sell $45 billion to $49 billion of bonds in an eight-part offering as soon as tomorrow that would be the largest on record, according to a person with knowledge of the transaction.

The sale, intended to finance a $130 billion purchase of Vodafone Group Plc’s 45 percent stake in Verizon Wireless, would be more than twice the size of Apple’s Inc.’s unprecedented $17 billion issue in April, according to data compiled by Bloomberg. Verizon is planning to sell fixed-rate debt with maturities ranging from three to 30 years as well as two portions of floating-rate securities, said another person, who asked not to be identified because terms aren’t set.

“It’s very difficult to find an issuer with this type of cachet,” said Thomas Chow, a Philadelphia-based money manager at Delaware Investments who helps oversee about $130 billion in fixed-income assets. “It’s a market leader, has great assets, operating leverage, and generates a large amount of free cash flow that allows for deleveraging,” he said. “As an investor, you’ve checked every box that you’d want to have checked.”

In addition to the dollar offering, Verizon may sell debt denominated in euros, British pounds, and possibly yen, analysts at Societe Generale SA wrote in a Sept. 8 report.

The offering is being managed by Barclays Plc, Bank of America Corp., JPMorgan Chase & Co., and Morgan Stanley, Verizon said in regulatory filings.

Bob Varettoni, a Verizon spokesman, declined to comment on the sale.


Loans Sought

Verizon is also seeking $14 billion of loans to help back the deal, according to a person with knowledge of that transaction. A $6 billion term loan due in three years will pay interest at 1.375 percentage points more than the London interbank offered rate, while a $6 billion term loan maturing in five years will have a rate of 1.5 percentage points more than Libor, said the person, who asked not to be identified citing lack of authorization to speak publicly about the matter.

Libor, the rate at which banks say they can borrow from each other, was set today at 25.59 basis points. A basis point is 0.01 percentage point.

Verizon’s three-year fixed-rate notes may yield about 165 basis points more than similar-maturity Treasuries; the five-year debt may pay a spread of about 190 basis points; the seven-year securities may pay about 215 basis points; the 10-year debt may pay about 225 basis points; the 20-year notes may pay about 250 basis points; and the 30-year bonds may pay about 265, one of the people said.

The company may sell three- and five-year floating-rate notes, the person said.

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