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Six months is now a very long time in the bond markets. "If you had said to someone in the midst of the May and June sell-off that within a couple of months there would be a deal that would attract $100 billion of orders and tighten 60bp in the first two to three days of trading, they would have raised their eyebrows," says Jamie Stuttard, head of international bond portfolio management at Fidelity Investments. But there was such a deal: the $49 billion, eight-tranche bond take-out that backs Verizon’s purchase of Vodafone’s 45% stake in Verizon Wireless. It’s the deal that not only created records, but seemingly left everybody happy. Verizon’s executives deserve plaudits for one of the great risk management exercises of all time. Banks involved in the deal have their share of both a landmark deal and an enormous pool of fees – profits that were likely swelled with the sharp rise in the price of the Verizon bonds after the deal broke.
Even bankers not on the deal talk of it in glowing terms, not least because it opens the eyes of other corporate issuers to what is now achievable in the bond markets.
