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US: CVS is borrowing a near-record US$40 billion to bankroll a deal

By  |  March 7, 2018

CVS Health kicked off the third-largest corporate bond sale on record to fund its acquisition of Aetna, testing the appetite of a market that’s off to its worst annual start in decades.

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    The pharmacy giant plans to issue US$40 billion of the investment-grade debt in a nine-part offering, people with knowledge of the matter said. That would be surpassed only by Verizon Communication’s US$49 billion offering in 2013 and Anheuser-Busch InBev’s US$46 billion sale two years ago.

    Order books of more than US$120 billion for the nine-tranche trade—the third largest US dollar high-grade corporate deal on record, according to IFR data—brought some relief after new issues have traded wider in secondary markets of late.

    “This is the deal of 2018,” Matt Brill, senior portfolio manager at Invesco, told IFR. “The market needs this to do well.”

    The CVS bond, which will help finance the US$69 billion acquisition of health insurer Aetna, has been hailed as a crucial test for the market that has provided some of the largest corporations with cheap financing for several consecutive years.

    CVS has been eyeing other currencies as well due to the large amount of debt it needed to raise. But hefty demand for the US dollar offering helped alleviate concerns about investor demand that has tapered off in recent weeks, according to Lipper data.

    Full Content: Wall Street Journal

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