Capital Markets

Verizon Leads Busy Week in Securities

The telecommunications company sells $4 billion of debt, surpassing offerings by Wachovia, Lehman Brothers, SYSCO, and PNC.
Stephen TaubFebruary 8, 2008

In a strong week for securities offerings, Verizon Communications sold $4 billion of debt on Thursday. The offer consisted of $750 million in 5-year notes, priced to yield 163 basis points more than comparable Treasuries; $1.5 billion in 10-year notes, priced to yield 178 points over Treasuries; and 30-year bonds at 195 points more than the benchmark.

Verizon is rated Single-A by Standard & Poor’s, A3 by Moody’s, and A-plus by Fitch.

The lead managers were Credit Suisse Securities, RBS Greenwich Capital, and JPMorgan for the 5-year notes; Goldman Sachs, JPMorgan, and UBS Securities for the 10-year notes; and Barclays Capital, Citigroup Global Markets, and JPMorgan for the 30-year bonds.

Verizon also announced that its board approved the repurchase of up to 100 million shares of its common stock, representing about 3.4 percent of outstanding shares.

Earlier in the week, Wachovia Corp. sold $3.5 billion of perpetual preferred stock. It will pay a dividend of 7.98 percent for 10 years; after that, it will change to a floating interest rate. Wachovia may redeem the preferred stock after 10 years. The investor group consisted of about 80 major domestic fixed-income investors.

“The strong investor demand is gratifying, and the offering will further solidify our capital position,” says Wachovia CFO Tom Wurtz. “This will provide Wachovia a very strong Tier 1 capital ratio as we begin 2008, and we expect that we will continue to increase our ratio over the remainder of the year.”

On Tuesday Lehman Brothers Holdings sold $1.65 billion in noncumulative perpetual preferred shares, according to Reuters. It had originally planned to raise just $300 million. The issue yields 7.95 percent.

Also this week, food distributor SYSCO Corp. sold $750 million in a two-part debt sale, including $250 million in 5-year notes and $500 million in 10-year notes. And PNC Financial Services Group, a regional bank, sold $450 million in 60-year trust preferred stock, Reuters reported. That was more than double the originally planned $200 million it had hoped to raise.