Verizon Communications returned to the investment grade market with its largest dollar bond since 2021 to help fund its $20bn acquisition of Frontier Communications and build out its fiber internet business.

The $11bn five-part deal launched with seven, 10, 20, 30 and 40 year maturities at Treasuries plus 90bps, 100bps, 110bps, 120bps and 130bps, respectively. Spreads tightened by 30bps from initial price thoughts as Bank of America, Goldman Sachs, JP Morgan, Morgan Stanley and Wells Fargo built an order book that was at least 6x oversubscribed.

Proceeds are expected to go toward the acquisition, including the assumption of Frontier’s roughly $12bn high-yield rated debt stack that Verizon says it intends to refinance once the buyout closes, pending some lingering California state approval issues.

The acquisition represents an about-face for Verizon, which sold its fiber assets to Frontier back in 2015 for $10.5bn in order to pay down debt and focus more on its east coast wireline business and wireless assets.

Now a decade later, Verizon is buying all of Frontier for twice that price as it looks to expand its fiber business coast to coast.

Verizon is also reportedly in talks to buy some of EchoStar’s AWS-3 spectrum in order to help catch up with the capacity gap that has grown between Verizon and its major competitors AT&T and T-Mobile. AT&T, for its part, announced it was buying spectrum from EchoStar in a $23bn deal back in August.

It has some investors worrying that even more capex spending and bond supply could be on the way.

“These businesses are pretty darn defensive, but I think we can probably ask the question — are they at the beginning of a major capex cycle?” one portfolio manager said. “It seems like all three of them are spending very aggressively on Spectrum and fiber, so your supply-demand can get a little imbalanced if you're continuing to issue a lot of debt.”