CVS's Potentially Huge Bond Sale May Resuscitate Ailing MarketBy
CVS Health Corp. looks ready to potentially pump one of the largest ever U.S. dollar corporate bond deals into a market desperate for a lifeline.
The possible huge deal will flow into a corporate credit market where recent new issues have faded in secondary trading as the Bloomberg Barclays index surged 11 basis points in February, the widest level this year. Large sales tend to push spreads wider, however if CVS prices this deal to demand, it may be the boost the market needs to regain its footing.
The drugstore chain said Thursday it will hold meetings with investors about a possible debt sale to finance part of its proposed $67.5 billion merger with Aetna Inc. Interest rates may be pressuring the company to pull the trigger sooner rather than later as Treasuries have risen more than 40 basis points across the curve since the start of the year.
CVS’s bond sale could be more than $45 billion, according to a presentation by the company on Feb. 26. It got a $49 billion bridge loan to back the proposed deal that could be financed by the new debt. If the company were to finance the whole loan, it would tie Verizon Communications for the largest U.S. dollar corporate debt offering on record.