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AbbVie Gets $70 Billion of Orders for Allergan Merger Bond Sale
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AbbVie Gets $70 Billion of Orders for Allergan Bond Sale
(Bloomberg) -- AbbVie Inc. has locked in at least $70 billion in orders for what could be a $28 billion bond sale to help finance its acquisition of Allergan Plc as investors flock to buy a piece of the largest bond sale this year.The drug maker is capitalizing on some of the cheapest borrowing costs of the year, with risk premiums over Treasuries at the lowest level since October 2018. That should encourage more borrowers to come forward, with investment-grade syndicate desks projecting another $17 billion in sales this week on top of AbbVie’s expected offering.AbbVie’s sale would easily top the charts as the biggest bond sale this year, and could crack the five largest of all time. The offering may come in as many as 10 parts, with the 30-year security possibly yielding around 1.95 percentage points above Treasuries, after initially discussing around 2.1 percentage points, according to people with knowledge of the matter, who asked not to be identified as the details are private.Read more: AbbVie offers scant premium on mega bond for M&AThe initial talk only suggests a premium of 0.05 to 0.1 percentage point over yields on AbbVie’s outstanding debt, according to data compiled by Bloomberg. Investors have placed around $70 billion in orders, with the majority skewed to maturities of at least 10 years, people familiar with the orderbook said.AbbVie agreed to buy Allergan in June for $63 billion in one of the largest pharmaceutical deals this year. It should bring much-needed diversity to the acquirer’s line-up, as AbbVie’s cornerstone drug Humira, which treats arthritis, has been facing more competition, especially in Europe. U.S. antitrust officials are still reviewing the deal, which the companies expect will close early next year.The deal is expected to take the combined company’s debt to more than three times a measure of its earnings, credit raters have said. Still, Moody’s Investors Service has left its rating on AbbVie unchanged at two levels above speculative grade, as the transaction should generate significant free cash flow. S&P Global Ratings, however, said it will likely cut AbbVie one level to BBB+, three levels above junk.Management has reiterated its intention to pay down debt, to achieve a ratio of net debt to Ebitda -- earnings before interest, tax, depreciation and amortization -- of 2.5 times by the end of 2021. Further deleveraging through 2023 is possible, Chief Financial Officer Rob Michael said on an earnings call earlier this month.Morgan Stanley, Bank of America Corp. and Barclays Plc are managing the bond sale, the person said.(Updates price talk in third paragraph)\--With assistance from Brian Smith.To contact the reporter on this story: Elizabeth Rembert in New York at erembert@bloomberg.netTo contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Molly Smith, Dan WilchinsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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AbbVie Begins Mega Bond Sale to Finance Allergan Acquisition
(Bloomberg) -- AbbVie Inc. is selling what could be $28 billion of bonds to help finance its acquisition of Allergan Plc, which would be the largest bond sale this year.The drug maker is capitalizing on some of the cheapest borrowing costs of the year, with risk premiums over Treasuries at the lowest level since last October. That should encourage more borrowers to come forward, with investment-grade syndicate desks projecting another $17 billion in sales this week on top of AbbVie’s expected offering.AbbVie’s sale would easily top the charts as the biggest bond sale this year, and could crack the five largest of all time. The offering may come in as many as 10 parts, with the 30-year security possibly yielding around 2.1 percentage points above Treasuries, according to people with knowledge of the matter, who asked not to be identified as the details are private.The initial talk only suggests a premium of 0.05 to 0.1 percentage point over yields on AbbVie’s outstanding debt, according to data compiled by Bloomberg. Investors have already placed $44 billion in orders, with the majority skewed to maturities of at least 10 years, the people said.AbbVie agreed to buy Allergan in June for $63 billion in one of the largest pharmaceutical deals this year. It should bring much-needed diversity to the acquirer’s line-up, as AbbVie’s cornerstone drug Humira, which treats arthritis, has been facing more competition, especially in Europe. U.S. antitrust officials are still reviewing the deal, which the companies expect will close early next year.The deal is expected to take the combined company’s debt to more than three times a measure of its earnings, credit raters have said. Still, Moody’s Investors Service has left its rating on AbbVie unchanged at two levels above speculative grade, as the transaction should generate significant free cash flow. S&P Global Ratings, however, said it will likely cut AbbVie one level to BBB+, three levels above junk.Management has reiterated its intention to pay down debt, to achieve a ratio of net debt to Ebitda -- earnings before interest, tax, depreciation and amortization -- of 2.5 times by the end of 2021. Further deleveraging through 2023 is possible, Chief Financial Officer Rob Michael said on an earnings call earlier this month.Morgan Stanley, Bank of America Corp. and Barclays Plc are managing the bond sale, the person said.(Updates with market context starting in the second paragraph)\--With assistance from Brian Smith.To contact the reporter on this story: Elizabeth Rembert in New York at erembert@bloomberg.netTo contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Molly Smith, Dan WilchinsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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AbbVie Gets $70 Billion of Orders for Allergan Merger Bond Sale
(Bloomberg) -- AbbVie Inc. has locked in at least $70 billion in orders for what could be a $28 billion bond sale to help finance its acquisition of Allergan Plc as investors flock to buy a piece of the largest bond sale this year.The drug maker is capitalizing on some of the cheapest borrowing costs of the year, with risk premiums over Treasuries at the lowest level since October 2018. That should encourage more borrowers to come forward, with investment-grade syndicate desks projecting another $17 billion in sales this week on top of AbbVie’s expected offering.AbbVie’s sale would easily top the charts as the biggest bond sale this year, and could crack the five largest of all time. The offering may come in as many as 10 parts, with the 30-year security possibly yielding around 2.1 percentage points above Treasuries, according to people with knowledge of the matter, who asked not to be identified as the details are private.The initial talk only suggests a premium of 0.05 to 0.1 percentage point over yields on AbbVie’s outstanding debt, according to data compiled by Bloomberg. Investors have placed around $70 billion in orders, with the majority skewed to maturities of at least 10 years, people familiar with the orderbook said.AbbVie agreed to buy Allergan in June for $63 billion in one of the largest pharmaceutical deals this year. It should bring much-needed diversity to the acquirer’s line-up, as AbbVie’s cornerstone drug Humira, which treats arthritis, has been facing more competition, especially in Europe. U.S. antitrust officials are still reviewing the deal, which the companies expect will close early next year.The deal is expected to take the combined company’s debt to more than three times a measure of its earnings, credit raters have said. Still, Moody’s Investors Service has left its rating on AbbVie unchanged at two levels above speculative grade, as the transaction should generate significant free cash flow. S&P Global Ratings, however, said it will likely cut AbbVie one level to BBB+, three levels above junk.Management has reiterated its intention to pay down debt, to achieve a ratio of net debt to Ebitda -- earnings before interest, tax, depreciation and amortization -- of 2.5 times by the end of 2021. Further deleveraging through 2023 is possible, Chief Financial Officer Rob Michael said on an earnings call earlier this month.Morgan Stanley, Bank of America Corp. and Barclays Plc are managing the bond sale, the person said.(Updates with orderbook size in headline, first and fourth paragraphs)\--With assistance from Brian Smith.To contact the reporter on this story: Elizabeth Rembert in New York at erembert@bloomberg.netTo contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Molly Smith, Dan WilchinsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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