Photographer: Tiffany Hagler-Geard/Bloomberg
UnitedHealth Group Inc. sold $9 billion worth of bonds, the biggest U.S. bond offering in months, signaling that there is still appetite for jumbo issuances from companies with top-tier ratings.
The healthcare giant issued the debt in seven parts, according to people familiar with the matter. The longest-dated portion, a 40-year security, yields 185 basis points (bps) above Treasuries, after initial price talk in the 210 bps range, said the people, who asked not to be identified as the details are private.
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The proceeds will go toward general corporate purposes, including refinancing the commercial paper used to partially fund UnitedHealth's acquisition of Change Healthcare Inc., according to Moody's Investors Service. The roughly $8 billion merger deal closed earlier this month, a few weeks after a judge rejected a challenge from federal regulators.
The jumbo sale is testing a battered high-grade primary market that has started to pick up since the start of earnings season, with borrowers looking to get deals done and take advantage of the recent rise in asset prices.
Bloomberg Intelligence analyst Mike Holland expects to see plenty of demand for UnitedHealth's sale, given the company's top-tier credit profile and a lack of other new offerings recently. "They have robust cash flow to fund the acquisition, and I don't think they necessarily need the financing," Holland said. "This is an industry bellwether, and there hasn't been lots of new healthcare debt, so I expect investor demand for the deal to be good."
Bond sales of this size have been rare in recent months, as companies grapple with soaring borrowing costs and uneasy investors. The $9 billion offering is the largest since Meta Platforms Inc. sold $10 billion of debt in early August. U.S. investment-grade bond supply is currently running 14 percent off last year's pace, according to data compiled by Bloomberg.
Wells Fargo & Co., Bank of America Corp., Barclays Plc, Citigroup Inc., JPMorgan Chase & Co., and US Bancorp led the UnitedHealth sale, the people said.
—With assistance from Caleb Mutua.
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