Verizon Communications Inc. is taking on new debt to help pay for its $130 billion deal with Vodafone Group PLC to buy the British cell phone carrier's stake in the company. While the exact size of that debt is still pending, two rating agencies assigned investment-grade ratings to it on Tuesday.
Standard & Poor's Ratings Services assigned a "BBB+" rating to the proposed notes, which will have varying terms. Moody's Investors Services assigned a "Baa1" rating, matching the rating the agency gave its existing debt after Verizon announced the deal.
Under terms of the arrangement, Verizon will pay $58.9 million in cash and $60.2 billion in stock. It will also issue $5 billion in senior notes payable to Vodafone and sell its 23.1 percent minority stake in Vodafone Omnitel NV to Vodafone for $3.5 billion. The remaining $2.5 billion will be paid in other ways.
Verizon is using this debt offering to raise money for the cash portion of the deal.
A report by the Wall Street Journal, citing unnamed sources familiar with the offering, says investors have put in orders for more than $90 billion of Verizon bonds. That is expected to bring the size of the deal to more than $40 billion. The newspaper said the bond sale is expected to be the largest corporate bond deal on record.
Investors are clamoring for the bonds, in part because they are being offered at cheaper prices than where its outstanding debt had been trading, according to the report. Underwriters are scheduled to price the deal Wednesday.
Verizon declined to comment on the matter.