Sprint Raises $6.5 Billion in Biggest Junk Sale Since 2008

Sprint Corp. raised $6.5 billion yesterday in the biggest high-yield offering since 2008 as sales of speculative-grade securities surpass last year’s record pace.

Sprint’s $4.25 billion of 7.875 percent, 10-year notes priced to yield 498 basis points more than similar-maturity Treasuries and its $2.25 billion of 7.25 percent, eight-year debt pays a spread of 466 basis points, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

Proceeds from the issue by the third-largest U.S wireless carrier will be used for general corporate purposes, Bloomberg data show. The securities are rated B1 by Moody’s Investors Service, four levels below investment grade, and one step higher at BB- at Standard & Poor’s.

Sales of dollar-denominated junk-rated debt this year of $242.5 billion exceed the $202.9 billion sold in the corresponding period of 2012, Bloomberg data show. Borrowers issued a record $357.3 billion of high-yield debt last year.

The sale is the largest high-yield offering since June 2008, when Intelsat priced $7.1 billion of bonds through three units, Bloomberg data show.

Yields on the Bank of America Merrill Lynch U.S. High Yield index have declined to 6.86 percent as of yesterday from a record high 22.65 percent during the credit crisis in December 2008 and reached an unprecedented low of 5.98 percent on May 9.

Offering Increased

The size of Sprint’s sale was earlier set at a minimum of $4 billion, a person familiar with the transaction said yesterday. JPMorgan Chase & Co., the largest underwriter of junk debt, led the offering.

Sprint was bought by SoftBank Corp. in July for $21.6 billion in founder Masayoshi Son’s bid to make the Overland Park, Kansas-based company a stronger rival against Verizon Communications Inc. and AT&T Inc., owners of the two biggest U.S. wireless carriers.

Tokyo-based SoftBank’s takeover included a $5 billion cash infusion, giving Sprint money to bolster its network and pursue acquisitions.

Verizon is planning to sell as much as $50 billion of investment-grade bonds to fund its purchase of Vodafone Group Plc’s 45 percent stake in Verizon Wireless, a person briefed on the company’s plans said Sept. 2.

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