Verizon shatters record, sells $49B in bonds to finance Vodafone deal

Verizon Communications (NYSE:VZ) blew past records by selling $49 billion in corporate debt in order to finance its $130 billion acquisition of Vodafone's 45 percent stake in Verizon Wireless.

The amount far exceeded the $20 billion that had been expected, according to earlier reports, and flew by Apple's (NASDAQ:AAPL) record $17 billion sale in April. Analysts said Verizon's bond sale indicated that despite the rise in yields on debt in recent months, investors are still clamoring to get into the debt market, especially for stable companies like Verizon.

As the AP notes, the debt Verizon sold will mature at eight different times, from three to 30 years, and investors placed more than $100 billion in orders for Verizon's offering. However, Verizon had to pay a high price to investors by pricing $11 billion of its 10-year notes at a yield of 5.19 percent, according to a deal document obtained by the AP. That is much higher than the 4.51 percent yield for similar bonds that Verizon issued before. Other reports also indicated the bonds sold at yields above the recent trading in Verizon debt.

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. 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.

More companies could jump into the fray in the debt market, which could indicate that more M&A activity is on the way, analysts said. "We're starting to see the animal spirits pick up again," Kathy Jones, a fixed-income strategist at Charles Schwab, told the New York Times. "Usually, once it gets going, it doesn't let up."

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
- see this AP article 
- see this NYT article

Related Articles:
Report: Verizon could be planning a $20B bond sale to finance Vodafone deal
Sprint may use $6.5B bond offering to pay down Clearwire debt
Verizon/Vodafone and Microsoft/Nokia deals driven by cheap debt, worries on interest rates
Report: Verizon paid billions more for Vodafone's VZW stake than it wanted to
McAdam: 'Verizon is not going to Canada'
Verizon to buy Vodafone's 45% stake in Verizon Wireless for $130B