NEW YORK: Verizon Communications hit the US high-grade market on Wednesday with a US$6.15bn five-part bond sale, two days after confirming the US$4.83bn purchase of Yahoo's core businesses.
Verizon (Baa1/BBB+/A-) was the lone deal in the primary ahead of the Fed's announcement later in the day, which bankers said was a sign of the issuer's confidence in the depth of the US dollar market.
That hunch proved true after the telecoms giant tightened pricing by between 20bp-25bp on the back of an order book that peaked at US$32bn.
That Verizon could draw such a large crowd - even at a time when many investors were heavily exposed to the credit - underscored the ongoing bid for yield and liquidity in the primary market.
Verizon's US$49bn bond sale in 2013 remains the largest ever seen in the high-grade market.
"That's as big a book you can see for an issuer like Verizon who everyone owns," said Matt Brill, portfolio manager at Invesco.
"Investors are full to the gills on Verizon and yet they still have massive demand."
In the end, the borrower priced a US$1bn three-year at T+55bp, a US$1bn five-year at T+75bp, a US$2.25bn 10-year at T+115bp and a US$1.5bn 30-year at T+190bp.
It also sold a US$400m three-year floater at three-month Libor plus 37bp.
At those levels, the company was seen achieving a flat concession for the three, five and 10 year bonds against a curve, where the 2.55% 2019s and 3.5pc 2024s were trading G spreads of 55bp and 108bp, respectively.
The 30-year meanwhile came with an approximately 5bp concession, said bankers who spotted the company's existing 6.55% 2043s at T+198bp.
Final books shrank to just US$28.65bn, with demand settling at US$4bn on the three-year, US$5.7bn on the five-year, US$9.1bn on the 10-year and US$9.2bn on the 30-year.
Order books for the floater hit US$650m.
The company said it would use proceeds to repay some US$2.25bn in floating rate notes that mature on September 15, and for general corporate purposes.
It was not clear if any funds would go to the Yahoo acquisition.
Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and Mizuho are active bookrunners on the trade.
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