Verizon Communications Inc. (NYSE: VZ) scored more points with investors and analysts now that the firm has agreed to purchase the remaining 45% stake of Verizon Wireless held by Vodafone Group PLC (NASDAQ: VOD). The only issue left in this $130 billion deal is actually paying for it. Verizon has priced a corporate bond offering of $49 billion. The reason that this is larger than any such deal we can recall is simply because it is a new record.

The prior bond sale record was held by Apple Inc. (NASDAQ: AAPL). Apple had the record at $17 billion for a corporate bond offering and that was back right before the summer when interest rates were lower. What is sad is that if Verizon with had come to terms with Vodafone around the same time, its borrowing rates would have been close to 1% lower on many of the maturity dates.

What investors should care about here is that Verizon could have sold even more debt. Fitch said that the orders were over $90 billion from bond buyers, and we heard it was actually closer to $100 billion in bond demand. This is a huge $15 billion 30-year tranche, but the coupon yield for the $11 billion 10-year was put up at almost 5.20%. Some $6 billion in a 20-year tranche went off at close to a spread of 250 basis points over Treasury yields.

Another issue that was strange here is that Verizon chose to do this on the same day as a 10-year Treasury Note auction. Effectively, Verizon was competing with the Treasury for a large bond offering at a time when many investors are still worried that interest rates will rise. The 10-year Treasury was a large sum at $21 billion and its 2.50% coupon priced at a yield of 2.946%.

Here is where things get really interesting with such a large offering. Verizon’s common stock dividend yield is about 4.6% and at $46.50 or so its 52-week trading range is $40.51 to $54.31. Verizon’s pre-merger market cap is also $133 billion, and it also came on the same day. Before the rise in interest rates, Verizon’s common stock was deemed cheap because its common stock dividend was higher than what its borrowing costs were. That is not the case universally any longer.

If you want to know just how large this record corporate bond offering is, what does it tell you when there were close to a dozen underwiters? The syndicate members for the offering were as follows: Barclays, BofA Merrill Lynch, J.P. Morgan, Morgan Stanley, Citigroup, Credit Suisse, Mitsubishi UFJ Securities, Mizuho Securities, RBC Capital Markets, RBS, and Wells Fargo Securities.

You had to know that this M&A deal and this bond offering were going to be pressed hard by Verizon almost at all costs. The preliminary filing shows the breakup fees that would have to be paid if Verizon cannot close upon the deal. Termination fees were listed as $1.55 billion in the event Verizon shareholders blocked the deal, $4.65 billion if the board of directors changed its recommendation regarding the share issuance, or a whopping $10 billion in the event of a termination by Vodafone because of a financing failure. Verizon projected that the total amount of funds needed to pay the cash consideration for the buyout would be approximately $60.53 billion.

Fitch thinks that the debt offering is good, even if it increases Verizon’s leverage. It believes that Verizon is significantly reducing its risk with the $49 billion corporate bond offering. This reduces its risk of rising interest rates and eliminates any breakup fee risks.

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