Verizon Pays Premium to Top Apple Bond Record

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Sept. 11 (Bloomberg) -- Verizon paid investors a premium on an unprecedented $49 billion of bonds, a cost Apple escaped during its then-record $17 billion offering four months ago. Michael McKee reports on Bloomberg Television' "Bloomberg West." (Source: Bloomberg)

For a $.45 stake in its wireless operations from a vodafone.

For more on verizon's historic bond offering them i want to bring in mike mckee.

M, talk about the premium that we saw he appeared like that of the -- mike, talk about the premium that we saw here.

220 five basis points over treasuries, that apparently is a big number when you think four months ago, apple sold with almost no premiums to treasuries, which was the largest foreign sell previous to that, only $70 billion.

Obviously the environment has changed a lot, and what change the environment?

Ben bernanke.

Market rates of gun of across the board.

Verizon has got to pay more because -- never the less, historically a premium that they paid is it really that huge?

Is directly it is a huge premium, but it is not a hybrid -- a high interest rates.

The interest rates have gone up, but they're still historically very low.

The tabulation that verizon is making is if we're going to do this with debt, that is the question itself, let's do it now , let's strike while the iron is hot.

I'm curious what kind of this event is this may put a rises in terms of all of the debt, $49 billion, if i borrow that kind of cash, but what if you borrow that kind of cash, i would go shopping with you.

I have to look at this at the cheapest financing they can get, and they must've done the calculations on this and figured that yes, they're going to take a hit to the equity value because now they are leaving open the company whole lot.

It is going to be cheaper than it would be to issue equity to do this.

But it does mean that going forward, if there is some kind of acquisition they would like to make, they cannot do it by borrowing.

It raises their leverage ratio quite a bit.

They go on a leverage basis to about 3.5 times the company, which gets into the territory that they're starting to get some downgrades.

Likes what is this line doing for treasury options?

What we see investors blue -- w00t by corporate bond sales?

People know that if coming.

They have to take a fairly large inventory of it.

He they always have at least for now buyer short of the federal reserve.

We will see.

All right, mike mckee, economics editor, we are on the markets again in just 30 minutes "money

This text has been automatically generated. It may not be 100% accurate.


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