Verizon refinances with record-smashing $49 billion in bonds
If you're one of the many Americans who had the good fortune to refinance your mortgage while interest rates were at their recent historic lows, it looks like Verizon is taking a page from your playbook.
The telecommunications giant is paying $130 billion to buy the 45 percent of Verizon Wireless it doesn't already own, and it is borrowing the money in the current market to lock in lower interest rates.
The total size of the bond offering comes in at a staggering $49 billion divided into eight tranches, meaning that Verizon is borrowing $49 billion in eight offerings of various maturities and payment terms.
"The $49 billion Verizon bond new issue being priced today looks very attractively priced for the investor, unlike the $17 billion Apple bond deal that was really priced well for the issuer," said Cliff Noreen, president of Babson Capital Management.
(Watch more: Verizon bonds very attractive: Strategist)
Noreen said his firm, which manages $183 billion, bought a significant amount of the bonds for clients.
The maturities will run from three years to 30 years. Some will be fixed-rate borrowings, and others will carry variable interest rates that change based upon prevailing market rates.
The largest chunk of the offering will come at the long end of the maturity spectrum. Verizon will sell $15 billion worth of 30-year, fixed-rate bonds carrying an interest rate 265 basis points above comparable maturity Treasurys. That means the bonds would carry a coupon of 6.5 percent in today's market.
The last massive bond offering was in April, when Apple sold $17 billion worth of debt. Investors who bought into that deal received a coupon rate lower than the one Verizon bond purchasers will get.
According to Informa Global Markets, Verizon's offering has broken just about every record for investment-grade bonds.
(Read more: Why $130 billion Verizon-Vodafone deal makes sense)
Jason Rotman, president of Lido Isle Advisors, thinks the offering is a bullish sign for the economy.
"The fact that Verizon has issued an offering of this size indicates they still think rates are low in the big scheme of things," Rotman said. "They are very bullish on their own growth, and the growth of the overall economy, and this is the key point."
—By CNBC's Dominic Chu. Follow him on Twitter @thedomino.