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Nothing Seems Too Big

03 June 2016 by lberuti

AET ( Aetna Inc ) and Humana are working through Department of Justice and state regulatory review of their pending merger, and pushbacks in states where they both have a major presence is to be expected. That is effectively what happened recently in Missouri where they were told they would be barred from selling some products. Nevertheless, it did not deter AET from issuing $13bln of bonds yesterday to help finance the $37bln operation. After 2 days of investor calls, they brought an 8-tranch-deal spanning from 18 months to 30 years. That probably explains why AET’s 5 year risk premium moved wider over the last few days. After the demand for the deal reached $43bln and all tranches were tightened by 10 to 30bps across the curve, the widening stopped though. The market still continues to digest record levels of issuance… for now.