Amgen to raise $24 billion after seeing about $90 billion in demand for mega bond deal

 Deal is one of 10th largest in U.S. corporate bond history

Amgen Inc. plans to borrow $24 billion in the U.S. corporate bond market on Wednesday to help fund its acquisition of Dublin-based Horizon Therapeutics, according to Informa Global Markets.

Amgen (AMGN) and Horizon Therapeutics (HZNP) announced plans for the mashup in December, with Amgen receiving a $28.5 billion bridge credit facility from Citibank and Bank of America to help aid the transaction.

With an initial target size around $20 billion, investor demand for the bonds reached about $90 billion, according to Informa. At $24 billion, it ranks in the Top 10 in terms of largest deals ever financed in the U.S. investment-grade corporate bond market, according to Informa data.

Amgen's mega financing comes despite sharply higher borrowing costs for businesses and households as the Federal Reserve looks to keep pulling U.S. inflation down from a peak of 9.1% last summer.

Yields in the U.S. investment-grade corporate bond market have retreated to around 5.3% from October's peak level of about 6%, in part on hopes that the Fed might be nearing the end of its rate hiking cycle. The pullback in yields underscores the rally in risk assets to kick off 2023, even though recession concerns linger and as companies face some of the highest borrowing costs in more than a decade.

High demand for Agmen's bonds signals a bullish tone on Wall Street, which allowed bankers to narrow the financing costs for the borrower, while also cutting back compensation due to investors.

Amgen's shortest two-year class of bonds was expected to clear at 65 basis points above the risk-free Treasury rate , according to Informa. That's down from earlier price talk of around 90 basis points above the risk-free rate, according to CreditSights.

Its longest 40-year class on bonds was expected to clear at a spread of 200 basis points above the risk-free rate, down from an initial guidance of roughly 230 basis points above the benchmark rate.

The bond financing comes despite a choppy few sessions on Wall Street. January's consumer-price index released on Tuesday pegged CPI at a slower 6.4% annual rate, but still well above the Fed's 2% target. That raised concerns about the potential for the central bank to raise rates higher than earlier anticipated.

https://www.morningstar.com/news/marketwatch/20230215554/amgen-to-raise-24-billion-after-seeing-about-90-billion-in-demand-for-mega-bond-deal