Verizon Communications Inc. and AT&T Inc. bonds weakened on Friday after SpaceX announced plans to buy U.S. spectrum to become a major mobile carrier. Verizon’s 6.05% note due in 2058 widened 22 basis points to 220 basis points as of 10:30 a.m. in New York, potentially setting a record spread for the security issued in May. AT&T’s bonds were wider by up to six basis points in lighter trading.
Both companies’ shares also sold off. AT&T and Verizon rank third and fourth in debt among nonfinancial firms in Bloomberg’s high-grade dollar corporate-bond index. SpaceX is acquiring spectrum from Grain Management LLC to beam cell service indoors via its Starlink network of over 10,000 satellites.
Pending FCC approval, SpaceX will combine satellite-to-cell with terrestrial networks for nationwide connectivity. The initiative may require massive investment, following SpaceX’s $25 billion bond sale in June and talks to raise $40 billion for Nvidia chips. Bloomberg Intelligence analyst Stephen Flynn said the capital-raising ability signals SpaceX’s potential to become a significant player in wireless markets, adding competition to the top three providers.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing