Fiserv Sells $9 Billion of Bonds in First Data Deal's U.S. Leg

(Bloomberg) -- Fiserv Inc. sold $9 billion of bonds as part of a cross-Atlantic sale to help finance its acquisition of First Data Corp.

The payment processing company’s dollar debt sale came in four parts. The longest portion, a 30-year security, yields 1.82 percentage points above Treasuries, after initial talk at around 2 percentage points, according to a person with knowledge of the matter, who asked not to be identified as the details are private.

Fiserv is looking at also selling bonds in euros and pounds, with total proceeds expected to be around $12 billion. The company is holding meetings with investors across Europe Tuesday through Thursday.

Such a split would resemble last month’s debt sale from Fidelity National Information Services Inc., a Fiserv competitor that borrowed $8.2 billion between euro, sterling and dollar portions. Fidelity National Information Services expressed a clear preference for European markets in the financing, which was used to help fund its acquisition of Worldpay Inc.

Fidelity National’s euro bonds have risen substantially in the secondary market since being sold on May 14, data compiled by Bloomberg show.

Read more: Bondholders Happy to Open Pocketbooks for Fiserv Funding Needs

U.S. companies are leading euro non-financial corporate bond sales this year, as comparatively low borrowing costs lure issuers back across the Atlantic. Fidelity National, along with companies like Netflix Inc. and medical-device makers Becton Dickinson & Co. have helped to lift total reverse Yankee issuance this year to about 40 billion euros ($45 billion) -- or more than all of 2018.

The primary market for corporate debt has come back to life in recent days, and the Fiserv deal could be the largest offering since International Business Machines Corp.’s $20 billion sale in May. Uncertainties around trade wars and how that might affect monetary policy still remain, but risk sentiment has improved, enticing borrowers.

“We think the bond deal will do well given strong secular trends, minimal exposure to US-China trade tensions, and improved conditions in the IG primary market,” CreditSights analyst Jordan Chalfin said in a report Monday.

Fiserv agreed to buy First Data in January for $22 billion, taking out a $17 billion bridge loan to help pay for the acquisition and refinance First Data’s debt. That will take the combined company’s total debt to around $24 billion, making it one of the top 10 technology issuers in the investment-grade market once the acquisition closes in the second half of this year, Bloomberg Intelligence analysts Rob Schiffman and Mike Campellone said in a report last month.

Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. managed the bond sale.

--With assistance from Alice Gledhill, Brian Smith and Natalya Doris.

To contact the reporter on this story: Molly Smith in New York at msmith604@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Dan Wilchins, Rizal Tupaz

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