Key insights
- Merck's $6 billion bond sale to refinance the Terns acquisition suggests a slight tightening of credit spreads, as the 30-year security yields less than initial expectations. While a large deal, it's primarily a balance sheet transaction with limited direct impact on broader US equities. The deal is one of many in the investment-grade primary market, suggesting stable corporate credit conditions.
Investing.com -- Merck & Co. is raising $6 billion through an investment-grade bond sale to refinance debt used to acquire Terns Pharmaceuticals Inc. earlier this month.
The pharmaceutical company is selling the notes in seven parts. The longest portion of the offering, a 30-year security, is set to yield 0.73 percentage point above Treasuries, compared with initial price talk of about 1.05 percentage points.
Merck last accessed the bond market in December, raising $8 billion to help finance another acquisition.
According to a company filing, proceeds from the note sale are intended to repay borrowings under a 364-day credit facility used to help fund the $6.7 billion acquisition of Terns, which closed May 5. The deal, announced in March, gives Merck access to a leukemia treatment.
Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the bond sale.
The deal is one of eight in the US investment-grade primary market on Monday, with expected proceeds totaling $12.2 billion.
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