Verizon Communications has issued US$13.3bn of new notes as part of debt exchange offers aimed at reducing borrowing costs.
Announcing the results of the exchange offers, the US’ largest wireless carrier said it would issue US$3.3bn of new senior…
Verizon Communications has issued US$13.3bn of new notes as part of debt exchange offers aimed at reducing borrowing costs.
Announcing the results of the exchange offers, the US’ largest wireless carrier said it would issue US$3.3bn of new senior unsecured notes due 2020, US$4.5bn of new senior unsecured notes due 2046 and US$5.5bn of new senior unsecured notes due 2054.
It will not receive any cash proceeds from the transaction.
The telco conducted the 11 separate private exchange offers in accordance with an offer memorandum dated 23 July and amended in early August. Some of the old notes were issued by Verizon itself, while others were issued by subsidiary Alltel Corporation. The settlement date was 21 August.
Specifically, Verizon issued the new US$3.3bn of 2020 notes in exchange for 2.5% notes maturing in 2016 and 3.65% notes due 2018.
The US$4.5bn of 2046 notes were exchanged for 7.35% notes due 2039, 7.875% debentures due 2032, 7.75% notes due 2032, 7.75% notes due 2030, 6.8% notes due 2029 and 6.4% notes due 2033.
Meanwhile, the US$5.5bn of 2054 notes were exchanged for 6.55% notes maturing in 2043.
None of the tendered 6.9% notes due 2038 or the 6.4% notes due 2038 were accepted.
Moody’s has assigned the newly-issued notes a Baa1 rating, saying this reflects the significant scale of Verizon’s operations, its diverse revenue mix and strong market position across all business segments, especially wireless. But the ratings agency also took stock of the large amount of debt Verizon took on to acquire Vodafone’s stake in their JV Verizon Wireless earlier this year, its large common stock dividend and the high level of capital expenditure required in the sector.
Moody’s noted that the rating is also based on the assumption that Verizon will use all available cash, other than that to be reinvested in the business, to deleverage so it can reduce the US$100bn debt pile it reported having as of 30 June.
Last month, after Verizon upsized the maximum size of the offering from US$12bn, Moody’s said it could save Verizon between US$100m and US$300m in borrowing costs.
The lead dealer managers for the exchange offers were Citigroup, JP Morgan and UBS. Co-dealer managers were Deutsche Bank, Mizuho, RBC, Barclays, Lloyds, Santander, MFR, Mischler, Samuel A Ramirez, PNC, SMBC Nikko and The Williams Capital Group.
Verizon carried out a US$4bn exchange offering in March and a £600m (US$1bn) one in June. Also in June, it issued US$3.3bn in new paper split between fixed and floating rate notes.
