Sunday 24 September 2017

Verizon to meet investors as it seeks $50bn

Natasha Doff and Katie Linsell

Verizon Communications plans to meet bond investors in Europe and the US next week as it seeks to raise as much as $50bn (€38bn) to buy a stake in its wireless unit from Vodafone.

The company hired banks to arrange the meetings that will start on Monday in the US and next Friday in Europe, according to a source.

The planned deal has triggered speculation that a bond sale from Verizon could exceed Apple's record $17bn of bonds issued in April. Proceeds would help fund its acquisition of Vodafone's Verizon Wireless stake for $130bn, giving it full control of the most profitable US mobile-phone carrier in the biggest buyout in more than a decade.

"It will be the company's inaugural deal in Europe so it may have to pay a bit of a new-issue premium to entice investors," said Sam Morton, a credit analyst at Mizuho International in London. "Verizon needs to do a significant portion of financing over stages."

Also in the new issue bond market, 02 owner Telefonica will meet investors for a possible debut sale of hybrid bonds in euro through its Telefonica Europe BV unit. The money will help fund the biggest Spanish phone company's acquisition of a controlling stake in Royal KPN NV's E-Plus German wireless unit, according to a Moody's Investors Service report.

Hybrid securities allow companies to borrow without putting their credit grade at risk because ratings firms typically count 50pc of the bonds as equity, reducing their view of a company's indebtedness.

Enel and America Movil SAB are among non-financial companies that sold a record €23.5bn of the securities in Europe this year.

"The hybrid market is very hot at the moment," said Georg Grodzki, head of credit research at Legal & General Investment Management in London. "Even companies which don't seem to have an acute need for bolstering their equity base or credit ratios seem to be tempted by the idea of raising affordable funding and cushioning their credit rating." (Bloomberg)

Irish Independent

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