Actavis to Wrap Up Mega-Bond Sale on Tuesday

By Mike Cherney 

Actavis PLC plans to complete its more-than-$20-billion bond offering on Tuesday, the latest sign of a booming bond market and a deal which would rank as the second-largest corporate offering on record.

Investors have placed roughly $90 billion in orders for the bonds, more than enough for the company to complete the sale, according to a person following the sale. Pharmaceutical company Actavis needs the money to pay for its $66 billion acquisition of Botox-maker Allergan Inc.

Investors had expected the company to sell bonds as early as this week. Portfolio managers said they weren't surprised by the strong demand for the sale, given the relatively low rates on safe government debt.

The bonds offered by Actavis carry fixed and floating rates, and have maturities ranging from 18 months to 30 years. A 10-year bond is being offered to yield about two percentage points more than benchmark Treasurys, though investors expect the yield to be lowered given the demand for the bonds.

The bond sale would rank behind only Verizon Communications Inc.'s $49 billion bond sale in September 2013, according to recent figures from Dealogic. Investment-grade firms such as Actavis are selling bonds in the U.S. at the fastest pace since 2009, according to Dealogic.

Many of the large bond deals recently have helped pay for mergers and acquisitions, a trend that investors expect to continue.

Joseph Mayo, head of credit research at asset manager Conning, which oversees about $94 billion primarily for insurance companies, said his firm put in an order for the Actavis bonds. Mr. Mayo said the yield on the bonds was attractive, and highlighted how the company plans to pay down its debt quickly and maintain its investment-grade ratings.

"The big theme to me is that there's going to be more of these," Mr. Mayo said. Whenever a major merger or acquisition is announced, "behind that event ultimately there's going to be a large bond deal."

Write to Mike Cherney at [e-mail]

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