Verizon Communications Inc. (VZ:US)’s potential purchase of the 45 percent stake held by Vodafone Group Plc (VOD) in their wireless venture may be financed with as much as $30 billion in bonds, according to Barclays Plc.
The transaction, which may total $130 billion, might be funded with $60 billion of debt, comprised of about $20 billion in unsecured dollar-denominated bonds, $5 billion to $10 billion in foreign currency notes and the remainder in bank loans and other financings, including those sold to so-called institutional investors, New York-based analysts Danish Agboatwala and Parth Shah wrote in a report yesterday.
The $20 billion in dollar-denominated notes would be the biggest corporate bond offering, surpassing Apple Inc. (AAPL:US)’s record $17 billion deal in April to finance a $100 billion capital reward to shareholders. Goldman Sachs Group Inc. and Deutsche Bank AG led the six-part deal, which topped Roche Holding AG’s $16.5 billion six-part transaction from February 2009, according to data compiled by Bloomberg.
The Verizon deal (VZ:US), which would be the biggest since Vodafone’s acquisition of Mannesmann AG in 2000, will increase gross debt to about $112 billion, according to Barclays. The analysts wrote Verizon’s ratio of debt to earnings may increase to 2.4 times and result in a ratings cut to BBB+; Standard & Poor’s grades the company A-.
Institutional investors are non-bank lenders such as collateralized loan obligations, bank loan mutual funds and hedge funds.
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