UPDATE:Verizon Sizes Multi-tranche Bond Issue At $6.25 Billion-Source

Verizon Communications Inc. (VZ) came to market to sell $6.25 billion in new debt Wednesday.

The deal is split five ways: a $1 billion three-year floating-rate piece; a $1.5 billion three-year fixed-rate piece; a $1.25 billion five-year fixed tranche; a $1.5 billion 10-year fixed tranche and a $1 billion 30-year fixed tranche.

"It's all across the curve and it's going to be demand-driven," a person familiar with the offering said.

Pricing offered at launch on the three-year floaters is the equivalent of the three-year fixed rate--0.61 percentage point over the three-month London interbank offered rate, or Libor. Meanwhile, the three-year fixed piece launched at the tight end of guidance at 0.85 percentage point over comparable Treasurys; the five-year piece launched at 1.05 percentage points over Treasurys; the 10-year at 1.35 percentage points over Treasurys; and the 30-year at 1.65 percentage points over.

Multi-tranche deals have become popular among issuers of late. French drug maker Sanofi-Aventis SA (SNY, SAN.FR) sold $7 billion of bonds across six tranches Tuesday, including one- and two-year debt, to help fund its acquisition of Genzyme Corp. (GENZ).

Leading the sale of Verizon's new three-year floaters is Goldman Sachs. The three-year fixed-rate piece is being led by Goldman, Citigroup, J.P. Morgan Chase & Co., Morgan Stanley and Wells Fargo, while the remaining five-, 10- and 30-year tranches are being led by Citi, J.P. Morgan, Morgan Stanley and Wells Fargo.

Bank of America Merrill Lynch, Barclays Capital and Royal Bank of Scotland have supporting roles on the transaction.

Verizon is expected to use the proceeds to pay down commercial paper debt and for general corporate purposes. As of March 22, the company had $3.7 billion of commercial paper outstanding, bearing interest at an average rate of 0.40%.

At the end of 2010, the company had $45.3 billion of long-term debt and $7.5 billion in debt maturing within one year, a spokesman said. It also had $2 billion in cash on its balance sheet, bringing its net debt to around $51 billion.

In January, the company said it is acquiring information-technology and cloud-computing specialist Terremark Worldwide Inc. (TMRK) for $1.4 billion. That deal is set to close this quarter.

The new bonds are expected to be rated A3 by Moody's Investors Service, A-minus by Standard & Poor's and A by Fitch Ratings.

By Katy Burne, Dow Jones Newswires; 212-416-3084; katy.burne@dowjones.com

Terremark Worldwide, Inc. (MM) (NASDAQ:TMRK)
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