Leap Wireless Bonds Surge After AT&T Agrees to Purchase Carrier

Bonds of Leap Wireless International Inc. (LEAP) surged after AT&T Inc. (T) agreed to buy the carrier for $1.2 billion to gain more airwaves and a larger piece of the pay-as-you-go market.

Leap’s $1.6 billion of 7.75 percent notes due October 2020 surged 14 cents to 115.4 cents on the dollar to yield 5.18 percent at 9:11 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds have climbed from a 2013 low of 94 cents on June 24.

The securities, issued by Leap’s Cricket Communications unit and rated CCC+ by Standard & Poor’s, also have a covenant that allows investors to receive 101 cents on the dollar in addition to unpaid interest for their holdings upon certain change-of-control situations, according to data compiled by Bloomberg.

AT&T, the second-largest U.S. wireless carrier, is ranked A- by S&P, 10 steps higher than junk-rated Leap’s unsecured obligations. Verizon Wireless is the nation’s biggest mobile-phone company.

To contact the reporter on this story: Charles Mead in New York at cmead11@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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