Breaking News from CNBC's Kayla Tausche: JPMorgan, Morgan Stanley Lead Largest-Ever Loan for Verizon Deal



Following is breaking news from CNBC's Kayla Tausche. All references must be sourced to CNBC.

JPMorgan,Morgan Stanley lead largest-ever loan for Verizon deal

By CNBC's Kayla Tausche

Sunday, 1 Sep 2013 | 5:19 PMET

Long-time client relationships between JPMorgan Chase and Morgan Stanley with Verizon Communications are expected to pay off this week, when the company announces a $130 billion deal to buy out Vodafone's 45 percent stake in its wireless joint venture.

As part of the deal, the two banks—which took lead advisory roles for the buyer—are underwriting a $60 billion bridge loan, the largest-ever for a corporate issuer, according to people familiar with the matter. Bank of America and Barclays also have underwriting roles, and bonds are expected to be issued to cover the bridge loan "very quickly," these people said.

(Exact terms of the bridge loan could not be learned, but are expected to be favorable for competitive,investment-grade loan.)

The deal is set to be announced as soon as Monday midday. According to Reuters, the Verizon board will meet first thing Monday morning to vote on the deal. Vodafone issued a statement Sunday saying, "There is no certainty that an agreement will be reached," and that "a further announcement will be made as soon as practicable."

If consummated, the deal would create many superlatives for Verizon. The bridge loan, at $60 billion,would be the largest ever for a corporation; the resulting bonds would make Verizon the singe-largest issuer of outstanding corporate debt (surpassing AT&T's).

Bond yields have risen in the last three months as the market prepares for the Federal Reserve to begin tapering its long-running stimulus program, leading fewer companies to issue bonds. Market sources said that has caused a buildup in demand for investment-grade corporate debt like Verizon's—though the company is said to expect its credit to fall by one notch,it will remain highly rated.

Dozens of banks will syndicate, or slice up the risk of the loan, after the potential deal gets announced, but the lead underwriters—JPMorgan and Morgan Stanley—will be set to earn the most in fees.

The deal will also be marquee for a former Morgan Stanley banker said to be advising in a solo capacity: Paul Taubman, the firm's former co-head of its securities business. Taubman retired from Morgan Stanley in November 2012 when CEO James Gorman said he only wanted one executive running the business, and the Verizon deal will be the first announced in which Taubman advised independently.

By CNBC's Kayla Tausche

© 2013


About CNBC:

With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD , CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to approximately 390 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 16 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide.

CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms. These include, the online destination for global business; CNBC PRO, the premium, integrated desktop/mobile service that provides real-time global market data and live access to CNBC global programming; and a suite of CNBC Mobile products including the CNBC Real-Time iPhone and iPad Apps.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at