Telefonica Said to Sell Its First Euro Bonds Since January
October 18, 2011, 11:29 AM EDTBy Esteban Duarte and Ben Martin
(Adds deal pricing from first paragraph.)
Oct. 18 (Bloomberg) -- Telefonica SA, Europe’s second- largest phone company, raised 1 billion euros ($1.4 billion) from its first benchmark-sized bond in the currency since January, according to a banker with knowledge of the deal.
The notes due February 2016 were priced to yield 310 basis points more than the benchmark swap rate, said the banker, who declined to be identified because the details are private. That compares with a spread of 286 basis points, or 2.86 percentage points, on Telefonica’s 4.375 percent notes due 2016, according to Bloomberg Bond Trader prices.
Madrid-based Telefonica offered the premium as yields on Spanish 10-year government bonds rose for a sixth day amid concern European leaders will struggle to resolve the region’s debt crisis. Telefonica’s bonds may benefit from its expansion outside Europe to Latin America, where revenue made up almost half the company’s total income for the second-quarter.
“I’m expecting a relatively good performance on this deal despite weak news on the sovereign front this morning,” said Christophe Herpet, a Paris-based fund manager at AXA Investment Managers, which oversees about $735 billion of assets. “Telefonica benefits from a diversified business profile thanks to its exposure to the Latin American region.”
Telefonica’s sale was its first in euros since Jan. 24 when it raised 1.3 billion euros from bonds due 2017. The phone company’s deal followed offerings from Spanish and Italian companies including Telecom Italia SpA, Iberdrola SA and Enel SpA in the past week.
Banca IMI SpA, Deutsche Bank AG, Societe Generale SA and UBS AG managed Telefonica’s bond sale.
--Editors: Andrew Reierson, Paul Armstrong
To contact the reporters on this story: Ben Martin in London at bmartin38@bloomberg.net; Esteban Duarte in Madrid at eduarterubia@bloomberg.net
To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net
