Verizon Sets Rate on $61 Billion Financing for Wireless PurchaseKrista Giovacco
Verizon Communications Inc. set the rate on a $61 billion bridge financing it’s seeking to support its purchase of the 45 percent stake held by Vodafone Group Plc in Verizon Wireless.
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.’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.