US telco Verizon Communications has priced €2.4bn (US$2.9bn) of senior unsecured notes in two tranches worth €1.4bn and €1bn, respectively.
Verizon plans to use the proceeds for general corporate purposes, which may include the acquisition of…
US telco Verizon Communications has priced €2.4bn (US$2.9bn) of senior unsecured notes in two tranches worth €1.4bn and €1bn, respectively.
Verizon plans to use the proceeds for general corporate purposes, which may include the acquisition of spectrum licences, and if market and other conditions permit, the repayment of debt.
The first tranche, due 2024, carries an annual 1.625% interest rate to yield 0.891% and was priced at 99.866.
The second tranche, which will mature in 2031, carries a 2.625% interest rate to yield 1.475% and was priced at 99.324.
The notes were issued at 80-85bps over mid-swaps and 120-125bps over mid-swaps, respectively.
Bookrunners on the deal were Barclays, Goldman Sachs, Merrill Lynch, Lloyds Bank, Banca IMI, BNP Paribas, Mischler Financial Group, Samuel A. Ramirez & Company and The Williams Capital Group.
The company has been striving to reduce its debt levels, which stood at US$109bn as of 30 September 2014, as a result of its US$130bn acquisition of Vodafone’s 45% stake in Verizon Wireless in February this year.
According to Fitch, which assigned the offering an A- rating, the precise timing of the reduction in leverage is uncertain given the potential for spending in wireless spectrum auctions.
However, it believes metrics will return to a level appropriate for the rating in the 2016/2017 timeframe due to Verizon’s strong position in the wireless industry.
The telco is taking part in the ongoing AWS-3 spectrum auction, which has so far raised US$36bn. Fitch pointed out that the company could spend up to US$15bn on spectrum before pressuring the A- rating. Similarly, Moody’s, which rated the offering BBA, suggested that it could tolerate a US$10bn-US$15bn debt financed spectrum purchase.
Last month, the New York-based operator issued US$6.5bn of senior unsecured notes to redeem existing bonds.
