T-Mobile Kicks off Two-Part Bond Sale

T-Mobile US Inc. tapped the U.S. investment-grade bond market on Monday as blue-chip firms rush to raise fresh capital ahead of key inflation data later this week.

The U.S. wireless carrier sold $2 billion of debt in two parts, according to a person with knowledge of the matter. The longest portion of the offering, a 30-year security, yields 1.63 percentage points above Treasuries, said the person, who asked not to be identified as the details are private, after earlier discussions for about 1.95 percentage points.

Proceeds from the offering will be used for general corporate purposes, which may include share buybacks, dividends, and refinancing of existing debt, said the person.

The carrier has $6.8 billion of cash and may produce $7 billion to $8 billion of free cash flow in the second half of the year, according to Bloomberg Intelligence analyst Stephen Flynn. Still, the wireless behemoth may sell bonds to address large obligations, including debt maturities, spectrum purchases, share buybacks, and a newly established dividend.

“It’s prudent for the company to bolster liquidity,” Flynn wrote in a note on Monday.

T-Mobile declined to comment.

The firm, which attained its blue-chip status last year, is taking advantage of robust demand for long-dated bonds as bets of a soft landing in the United States and hopes that central banks will soon be able to slow their tightening campaigns increase.

High-grade borrowers raised $55.5 billion last week, the third-largest weekly tally this year, with supply heavily skewed to debt due in under 10 years.

T-Mobile was among 11 issuers tapping the high-grade market on Monday. Investment-grade borrowers were expected to raise $30 billion this week. Citigroup Inc., Morgan Stanley, RBC Capital Markets, and Wells Fargo & Co. managed the bond sale, the person said.

—With assistance from Allison Nicole Smith.

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