The loan, which matures Sept. 2, 2014, will pay interest at 1.5 percentage points more than the London interbank offered rate, based on Verizon’s ratings of BBB+ at Standard & Poor’s and Baa1 from Moody’s Investors Service, according to a regulatory filing today. Three-month Libor was fixed at 0.26 percent today.
The financing, includes a $12 billion term portion and a $49 billion piece, which Verizon plans to reduce “with the issuance of permanent financing,” the New York-based carrier said in a statement yesterday. The company will probably issue $40 billion to $50 billion of bonds, in more than one offering, a person briefed on the plans said yesterday, who asked not to be identified citing lack of authorization to speak publicly.
JPMorgan Chase & Co., Bank of America Corp., Barclays Plc and Morgan Stanley are providing the bridge deal to Verizon. Bridge facilities are short-term loans that usually mature in one year and are often used as backstops to bond offerings or longer-dated bank debt.
A bond sale from Verizon may surpsass Apple Inc. (AAPL)’s record $17 billion deal in April that financed a $100 billion capital reward to shareholders. The six-part deal for the Cupertino, California-based iPhone maker topped Roche Holding AG’s $16.5 billion transaction from February 2009, according to data compiled by Bloomberg.
Verizon is also seeking a $2 billion revolving credit line to support the purchase. There’s a 0.1 percent fee on unused portions of the loan.
Moody’s and S&P lowered their grades on Verizon yesterday from A3 and A-, and have a “stable” outlook on the company. At those ratings Verizon would have paid 1.25 percentage points more than Libor, according to the filing.
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