AW ansd all: WorldCom Readies a Record Investment-Grade Deal And Corporate Bond Yields Rise in Anticipation
interactive.wsj.com.
Excerpts:
WorldCom, which has shaken up the telecommunications business with its aggressive acquisitions, is about to do the same in the corporate bond market as it readies what could be the biggest investment-grade issue ever.
The company, based in Jackson, Mississippi, plans to market $3-$4 billion of debt this week through a slew of underwriters led by Salomon Smith Barney. And, market players say, if there's enough demand, the offering could be increased and total up to $6 billion, the size of WorldCom's shelf registration.
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To be sure, WorldCom has places to put the money to work. The company is in the midst of buying long-distance carrier MCI. It has to pay British Telecommunications $6.94 billion to buy BT's MCI shares at $51 each. WorldCom will also use its own stock to buy the publicly owned shares of MCI. The deal, which is expected to close this quarter, awaits approval from the Federal Communications Commission and three state regulators.
WorldCom may also need cash to fund future acquisitions. Just last week, MCI announced it would buy Brazil's long-distance carrier, Embratel, for $2.3 billion. MCI bought the company as part of an auction conducted by the Brazilian government. (For more on this, see International Trader.) It's unclear how the acquisition will be funded, and WorldCom officials declined to comment.
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I'm probably going to buy [WorldCom debt] on a new-issue basis. It's probably the No. 1 credit you want to own in telecom," says Cathy Bunting, portfolio manager of the New England Bond Income fund.
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