Report: Verizon could be planning a $20B bond sale to finance Vodafone deal

Verizon Communications (NYSE:VZ) is on track for the biggest sale of corporate debt ever--as much as $20 billion--in order to finance its $130 billion acquisition of Vodafone's 45 percent stake in Verizon Wireless, according to multiple reports.

According to reports in the Wall Street Journal and Financial Times, which cited both regulatory filings and unnamed sources familiar with the matter, the bond sale could be priced as early as Wednesday. The Journal report, citing the banks backing the deal, said Verizon will sell debt ranging in maturity from three to 30 years. The arrangers of the deal are J.P. Morgan Chase, Morgan Stanley, Barclays and Bank of America Merrill Lynch, and they expect to sell both fixed- and floating-rate debt in the offering.

A debt sale of $20 billion would surpass Apple's (NASDAQ:AAPL) record $17 billion sale in April. Verizon declined to comment, according to the Journal.

Companies have engaged in large sales and bond offerings in recent months as concerns swirl that the Federal Reserve may start to slow its purchases of mortgage-backed securities, which could lead to higher interest rates and borrowing costs.

Verizon last week announced its mammoth deal with Vodafone, which will give it full control over its wireless operations. The deal itself is relatively simple but the financing may be complex; the acquisition is expected to close in the first quarter of 2014.

Verizon will pay for the deal via $60.2 billion in stock and $58.9 billion in cash, with the remaining $10 billion made up of other considerations, including Verizon's 23 percent stake in Vodafone Italia (worth $3.5 billion) and $5 billion in notes payable to Vodafone. Vodafone said the deal will trigger a U.S. tax bill of $5 billion.

Sprint's (NYSE:S) $6.5 billion bond offering last week reportedly broke the record for the single largest noninvestment-grade offering ever sold directly to investors in a single day. Reports also indicated that Sprint will use part of the offering to pay off the more than $4 billion in debt owed by Clearwire, which Sprint acquired in July.

For more:
- see this SEC filing
- see this WSJ article (sub. req.)
- see FT article (sub. req.)
- see this second FT article (sub. req.)
- see this third FT article

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