AbbVie readies $27bn bond sale to finance Allergan takeover
Corporate issuance set to be among largest on record in US
Pharmaceutical company AbbVie prepared to sell one of the largest US corporate bond deals on record on Tuesday, as the company seeks to finance its takeover of former-rival Allergan.
AbbVie is looking to borrow in the region of $27bn, according to people familiar with investor conversations. The debt will be split across 10 different maturities from 1.5-years up to 30-years.
At that size, it will be the same size as Comcast’s $27bn bond sale in October 2018, to become the joint-fourth largest deal ever. The largest deals on record are Verizon’s $49bn deal in 2013 and Anheuser-Busch InBev’s $46bn bond sale in 2016. CVS issued $40bn in March 2018.
Bank of America, Barclays and Morgan Stanley are bookrunners for the bond sale.
Despite the hefty debt raising, AbbVie is expected to cling on to its investment-grade bond rating due to commitments to bring it’s leverage down from 3.4 times debt to Ebitda to 2.5 times by the end of 2021, according to people familiar with the company’s plans.
The new issuance will take Abbvie’s total debt to around $90bn, making it one of the most indebted companies in the world and further increasing the debt held by triple-B rated companies that sit just above becoming junk rated.
“I do think it will give investors a positive view that they will deleverage over time,” said Andrew Forsyth, a portfolio manager at BNP Paribas Asset Management. “On a megadeal it really depends on the prospects for the companies that are combining. In this case it’s reasonably positive.”