(Bloomberg) -- T-Mobile US Inc. sold more than half-a-billion dollars worth of bonds backed by wireless equipment contracts after postponing the deal in August, when debt markets were roiled by a maelstrom of surprise economic, corporate and central bank news.
The telecom giant sold $561.3 million of notes in three parts on Wednesday following a marketing process that kicked off last week, according to people familiar with the matter. The highest-rated tranche carries a coupon of 4.25%, they added, asking not to be named discussing private details.
The offering was initially pulled in August as Wall Street’s gauge of stock market volatility — the VIX — spiked the most in six years on the back of weak US jobs data, underwhelming technology company earnings and a Bank of Japan rate hike.
Royal Bank of Canada structured T-Mobile’s transaction, which was more than three-times oversubscribed and drew new investors who hadn’t participated in T-Mobile’s offerings before, according to Nick Rogers, head of non-traditional ABS origination at the bank.
“Late July, early August when we initially began marketing this transaction, we expected that to be a good time in the market,” said Rogers. “What ended up happening was there were central bank announcements, there were higher jobless claims and a number of other unfortunate economic news items that shook the market.”
A spokesperson for T-Mobile didn’t immediately reply to a request for comment.
Still, the asset-backed bond market proved to be fairly resilient during August, compared to the leveraged loan market where multiple offerings were shelved and the corporate bond market which was temporarily shut down.
“There were a couple of days in the market when all ABS deals were trying to figure out what the next steps were,” said Rogers. “There were a number of transactions that, after holding their breath for a few days, did continue to make their way through the market.”
T-Mobile’s ABS deal is its second such offering this year, following a February sale of the same size and backed by similar assets. So far, ABS issuance in 2024 is far ahead of last year’s pace, with $281.2 billion of deals sold, data compiled by Bloomberg shows. Seven deals priced on Tuesday, helping push up sales by 26% from a year earlier.
“September definitely was an active month for issuance,” said Rogers. “We saw great matching of demand and supply in the market across asset classes, including Verizon bringing their own handset transaction,” he added. The US’s biggest wireless carrier sold $2.1 billion of bonds in early September, backed by mobile payment plans. On Monday, Verizon announced a $3.3 billion deal to sell the rights to lease thousands of mobile phone towers to digital infrastructure firm Vertical Bridge.
“We’re all so absolutely tethered to our mobile devices, and even if you lose your job, you need your phone to find the next job,” Rogers said. “So, it’s just such an essential asset for us all today. I think that continues to resonate with investors, which showed up in the status on the [T-Mobile] transaction.”
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