Investors Warm to CVS Bond Issue, Stock Investors Take Note

Strong investor demand for CVS Health’s (NYSE: CVS) U.S. $40-billion M&A bond gave a shot of confidence to the U.S. high-grade bond market Tuesday after a recent bout of volatility in the usually rock solid asset class.

Order books of more than $120 billion for the nine-tranche trade — the third largest U.S. dollar high-grade corporate deal on record, according to IFR data — brought some relief after new issues have traded wider in secondary of late.

The CVS bond, which will help finance the $69-billion acquisition of health insurer Aetna (NYSE: AET) had been hailed as a crucial test for the market that has provided some of the largest corporations with cheap financing for several consecutive years.

CVS had been eyeing other currencies as well due to the large amount of debt it needed to raise.

But hefty demand for the U.S. dollar offering helped alleviate concerns about investor demand that has tapered off in recent weeks, according to Lipper data.

The asset class, for example, last month saw its biggest weekly outflow since November 2016. Analysts have also warned about wilting demand from foreign investors as hedging costs have risen.

Meanwhile, the Woonsocket, Rhode Island-based company announced Wednesday that it has expanded its safe medication disposal program inside select CVS Pharmacy locations in Rhode Island to help facilitate proper and timely disposal of opioids and other medications that could be diverted or misused if left in people's homes.

Shares in the company began trading on Wednesday down 60 cents, to $67.05, within a 52-week trading range of $66.45 to $84.00