Verizon Communications Inc.’s potential purchase of the 45 percent stake held by Vodafone Group Plc in their wireless venture may be financed with as much as $30 billion in bonds, according to Barclays Plc.
The transaction, which may total $130 billion, might be funded with $60 billion of debt, comprised of about $20 billion in unsecured dollar-denominated bonds, $5 billion to $10 billion in foreign currency notes and the remainder in bank loans and other financings, including those sold to so-called institutional investors, New York-based analysts Danish Agboatwala and Parth Shah wrote in a report yesterday.
The $20 billion in dollar-denominated notes would be the biggest corporate bond offering, surpassing Apple Inc.’s record $17 billion deal in April to finance a $100 billion capital reward to shareholders. Goldman Sachs Group Inc. and Deutsche Bank AG led the six-part deal, which topped Roche Holding AG’s $16.5 billion six-part transaction from February 2009, according to data compiled by Bloomberg.
The Verizon deal, which would be the biggest since Vodafone’s acquisition of Mannesmann AG in 2000, will increase gross debt to about $112 billion, according to Barclays. The analysts wrote Verizon’s ratio of debt to earnings may increase to 2.4 times and result in a ratings cut to BBB+; Standard & Poor’s grades the company A-.
Institutional investors are non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds.