Fiserv kicks off First Data bond sale, could be $12 billion

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Fiserv Inc. is kicking off a cross-Atlantic bond sale that could raise about $12 billion to help finance its acquisition of First Data Corp.

The payment processing company is selling senior unsecured U.S. dollar bonds in as many as four parts, according to a person with knowledge of the matter. The longest portion of the offering, a 30-year security, may yield about 1.85 percentage points above Treasuries, after initial talk at around 2 percentage points, said the person, who asked not to be identified as the details are private.

Fiserv, which wrapped up meetings with U.S. investors last week, is also holding meetings across Europe Tuesday through Thursday. The company may choose to issue in euros as well as pounds. The U.S. and European offerings are expected to total around $12 billion.

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 expressed a clear preference for European markets in the financing, which was used to help fund its acquisition of Worldpay Inc.

“Investors are likely to look through the material leverage increases and participate in the new issues in as large a manner,” Stifel analyst Scott Shiffman said in a report Monday, referencing both Fiserv and Fidelity National’s offerings. Fidelity National’s euro bonds have traded up substantially in the secondary market since pricing on May 14, data compiled by Bloomberg show.

Issuing Abroad
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. are managing the bond sale, the person said.

Bloomberg News
Payment processing M&A Fiserv First Data