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UnitedHealth Sells $2.5 Billion of Bonds to Finance Amil Stake

Oct. 17 (Bloomberg) -- UnitedHealth Group Inc. raised $2.5 billion in a four-part, dollar-denominated debt offering to help finance the biggest U.S. health insurer’s plan to buy 90 percent of Amil Participacoes SA.

UnitedHealth sold equal $625 million portions of 0.85 percent, three-year notes that yield 45 basis points more than similar-maturity Treasuries, 1.4 percent, five-year debt with a 65 basis-point spread, 2.75 percent bonds due in February 2023 that pay 95 basis points more than benchmarks and 3.95 percent, 30-year securities with an extra yield of 110 basis points, according to data compiled by Bloomberg.

Proceeds will fund a portion of the $4.9 billion acquisition price, Minnetonka, Minnesota-based UnitedHealth said today in a regulatory filing. The company’s $1.1 billion of 2.875 percent notes maturing in March 2022 traded at 103 cents on the dollar on Oct. 12 to yield 2.5 percent with an 85 basis-point spread over Treasuries, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Buying the Rio de Janeiro-based insurer and hospital chain would give UnitedHealth a stake in the world’s second-biggest emerging economy as U.S. insurers snap up smaller rivals while preparing for tighter profit margins under President Barack Obama’s health-care overhaul.

The new bonds are expected to be rated A3 by Moody’s Investors Service, which signals the debt is subject to low credit risk, Bloomberg data show.

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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