Everybody on Wall Street knew that Verizon had to raise this

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canada goose black friday sale The big financial news of the day is the Verizon bond issue, and Reuters (or rather our sister publication, IFR) canada goose uk outlet is all over it. The most awesome aspect of the deal is its monstrous size: $49 billion, across eight different tranches, from three years out to 30. The biggest tranche, the 30 year, is $15 billion on its own, and priced at 265bp over Treasuries: that works out to a very uk canada goose outlet tasty 6.5% yield. No canada goose wonder the deal was oversubscribed, and that the bonds have canada goose coats on sale been tightening sharply in the secondary market. canada goose black friday sale

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Canada Goose Parka Verizon is paying eye watering sums of canadian goose jacket money to get this deal done. Wall Street fees alone will probably approach $1 billion: some $500 million just for Canada Goose Jackets M advice, plus the fees on the $61 billion bridge loan (call it $200 million right there), plus the fees on $49 billion in bonds (another $300 million, probably). Canada Goose Parka

canada goose And then there are the canada goose uk black friday hidden fees, which are bigger still. If Verizon raises $49 billion and then the bonds trade canada goose black friday sale in by 40bp, the investors in those bonds will have made billions of dollars, in mark to market profits, over the course of one day. To give just one example: a 30 year bond with a 6.5% coupon, if it trading at 6.1%, corresponds to a price of $105.48. So if investors spend $15 billion on such bonds at 6.5%, and then those bonds tighten to 6.1%, then the investors who got in on the bond will make a one day profit of $822 million. And that Canada Goose Coats On Sale just one tranche, corresponding to roughly 30% of the canada goose store total buy canada goose jacket cheap financing. But in this case, we not just talk about foregone theoretical proceeds: we talking about real cash, which Verizon is canada goose outlet sale going to need to pay out to bond investors canada goose factory sale for decades to come. The $15 billion 30 year bond will pay a total of $29.25 billion in coupon uk canada goose payments over its lifetime; if it had come at a yield of 6.1%, that number would have been $27.45 billion a savings of $1.8 billion in cash. And again, that just one tranche. canada goose

Canada Goose online Which is not to say that the canada goose coats Verizon https://www.canadagoosejacket-outlet.ca deal was mispriced. Everybody on Wall Street knew that Verizon had to raise this money, and so they made Canada Goose Online it as expensive as possible for Verizon to do so. It the first rule of fundraising: you can only raise cheap money when you don need it. When you do need it, you going to pay up. Especially when you need to raise the sheer quantity that Verizon was asking for here. Canada Goose online

canadian goose jacket It hard to put $49 billion in context: few numbers, in the real world, are remotely that big. (Take Yankee Stadium, fill it to capacity, and give everybody in it a million dollars you basically there.) As a result, journalists have a habit of moving to GDP numbers. IFR says that $49 billion is than the GDP of some 90 countries while Business Insider, inspired by Ben Eisen, helpfully provides a list of some of those countries. (Luxembourg! Honduras! Afghanistan!) canadian goose jacket

canada goose coats The problem is that the $49 billion is not the same thing as what you might call Verizon gross canada goose clearance sale corporate product. The comparison isn quite as bad as the typical stock versus flow solecism (saying, for example, that Stanford endowment exceeds the GDP of Jamaica), but it still not a good one. If you want to compare Verizon to a country, you should be looking canada goose uk shop at Verizon revenues which are in the $115 Canada Goose Parka billion range rather than buy canada goose jacket its borrowings. canada goose coats

canada goose store Still, the national comparison is worth making, because if Verizon is borrowing canada goose clearance $49 cheap canada goose uk billion on revenues of $115 billion, that means that this single deal is roughly equivalent to a sovereign country going out into the markets and borrowing 42% of GDP in one stroke. Of course, companies can dedicate more of their revenues to debt service than countries can. But I spent a bunch of time playing around with World Bank data this morning, Canada Goose Outlet to see which countries have tax revenues in the neighborhood of $115 billion. The answer: $115 billion is more than the tax revenues of Colombia, Canada Goose sale Taiwan, Greece, or Israel, and is roughly double the revenues of New Zealand. It real money. canada goose store

canada goose deals Verizon is huge. With about 200,000 employees, if you include all their families, you pretty much at the total population of Luxembourg. Verizon Wireless has over 100 million customers; today cheap Canada Goose bond issue works out at about $450 per customer. It a lot of money, but Verizon can afford it. Mobile communications are the defining characteristic of the world we living in, and Verizon is one of the global giants in the sector. Even with its massive new debt load, its prospects are a hell of a lot rosier than those of Greece canada goose deals.


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