NEW YORK (TheStreet) -- Shares of Verizon Communications (VZ) - Get Report are up 0.33% to $55 in pre-market trading on Wednesday as the company plans to sell about $1.2 billion in bonds backed by phone contracts, the Wall Street Journal reported.
The phone contracts are from about 2.5 million people across the U.S. who recently bought new iPhones and other phones to use with Verizon plans.
The monthly payments that customers make on their phones would be used to pay interest and principal to buyers of the securities, the majority of which are expected to receive triple-A ratings from Fitch Ratings, according to the Journal.
The New York-based wireless carrier has not yet priced the new securities, so their interest rate is not known.
The deal is expected to enter the market during the third quarter.
This approach is borrowed from the auto industry, where financing companies for years have bundled auto loans into bonds, the Journal noted.
The wireless sector's model is shifting toward this direction as phones become more expensive and financing plans flourish.
Separately, TheStreet Ratings Team has a "Buy" rating with a score of A on the stock.
The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, increase in net income, expanding profit margins and growth in earnings per share.
The team believes its strengths outweigh the fact that the company has had generally high debt management risk by most measures that were evaluated.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: VZ