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Economy May 18, 2026 03:10 PM

Merck sells $6 billion in investment-grade notes to refinance Terns acquisition loan

Seven-part bond offering will replace borrowings used to fund the $6.7 billion purchase of Terns, which provides Merck with a leukemia therapy

By Jordan Park

Merck & Co. has raised $6 billion via an investment-grade bond issuance to repay short-term borrowings used to finance its recent acquisition of Terns Pharmaceuticals. The notes were issued in seven tranches, including a 30-year security priced tighter than initial guidance, and were arranged by four major banks. Proceeds will retire borrowings under a 364-day credit facility tied to the $6.7 billion deal, which closed May 5 and secures a leukemia treatment for Merck.

Merck sells $6 billion in investment-grade notes to refinance Terns acquisition loan

Key Points

  • Merck raised $6 billion through an investment-grade bond sale to refinance borrowings used to acquire Terns Pharmaceuticals.
  • The notes were issued in seven tranches; the 30-year security priced at 0.73 percentage point above Treasuries versus initial price talk of 1.05 percentage points.
  • Proceeds will repay borrowings under a 364-day credit facility used to fund the $6.7 billion acquisition of Terns, which closed May 5 and gives Merck access to a leukemia treatment.

Overview

Merck & Co. completed a $6 billion investment-grade bond offering intended to refinance debt incurred in connection with its acquisition of Terns Pharmaceuticals Inc. earlier this month. The company sold the new notes in seven separate tranches, using the proceeds to pay down borrowings under a 364-day credit facility that supported the purchase.

Pricing and structure

The longest-dated portion of the sale is a 30-year security, which was set to yield 0.73 percentage point above comparable Treasuries. That pricing tightened relative to initial market indications, where investors were shown price talk near 1.05 percentage points above Treasuries. The offering was distributed across seven parts; no further yields or tranche-level terms were disclosed in the company filing.

Purpose of proceeds

According to Merck's filing, the bond sale's proceeds are earmarked to repay borrowings under the 364-day credit facility used to help fund Merck's $6.7 billion acquisition of Terns. That transaction, announced in March and closed on May 5, grants Merck access to a leukemia treatment developed by Terns.

Bank arrangers and market context

Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. served as managers for the bond sale. The transaction was one of eight new issues in the U.S. investment-grade primary market on Monday, with the collective expected proceeds across those deals totalling $12.2 billion.

Recent financing activity

Merck last tapped the bond market in December, when it raised $8 billion to support another acquisition. The current issuance replaces short-term credit that financed the Terns takeover and moves that exposure onto long-dated debt markets.

Takeaway

The offering shifts borrowings tied to the Terns acquisition from a 364-day facility to investment-grade notes across multiple maturities, including a 30-year tranche that priced more tightly than initial guidance. The move consolidates financing for the $6.7 billion deal that provides Merck with access to a leukemia therapy.

Risks

  • Refinancing risk tied to moving short-term credit under a 364-day facility into longer-dated notes could expose Merck to market pricing fluctuations - impacts corporate borrowers and fixed-income markets.
  • Tightness or loosening of bond pricing relative to initial guidance indicates sensitivity to investor demand and market conditions on primary issuance days - impacts investment-grade primary market participants and arrangers.
  • The transaction was one of eight investment-grade deals with expected proceeds of $12.2 billion on the same day, creating competitive supply dynamics that could influence pricing and execution - impacts bond issuers and institutional investors.

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