Morning Commentary: Verizon’s 5.9% $25-par notes busy, lower amid reports of Yahoo! deal

By Stephanie N. Rotondo

Seattle, July 22 – Verizon Communications Inc.’s 5.9% $25-par notes due 2054 (NYSE: VZA) were active in early Friday trading, falling 15 cents to $28.32.

A trader noted that there was one large block of notes that traded that made up most of the early trading action.

“That really ripped up,” the trader noted, adding that the paper was “overvalued” and trading at spreads barely over Treasuries – about 1% to the 2019 call date.

The activity could be due to reports that Verizon is this close to inking a deal to acquire Yahoo! Inc.’s internet business.

“We’ll see,” the trader said, pointing out that there has been chatter of such a deal circulating for “awhile.”

“But it seems like the buzz is getting bigger,” he said.

Bloomberg reported Friday that Verizon is looking at paying close to $5 billion for the unit.

Meanwhile, there continued to be speculation that another financial name was bringing a deal on Monday.

“Everybody is trying to a guess who,” a trader said. While it could be any of the big banks, Morgan Stanley & Co. Inc. did just announce a $2.83 billion redemption of its trust preferreds.

“So it could be Morgan Stanley,” he said.

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