Telekom Austria (TA) has priced a €750m (US$1.02bn) eurobond to help finance spectrum acquired at Austria’s recent 4G auction. The bond carries a coupon of 3.125% and priced at 99.367 to yield 3.216%, equal to a spread of 155 basis points over…
Telekom Austria (TA) has priced a €750m (US$1.02bn) eurobond to help finance spectrum acquired at Austria’s recent 4G auction.
The bond carries a coupon of 3.125% and priced at 99.367 to yield 3.216%, equal to a spread of 155 basis points over mid-swaps. The maturity date is 3 December 2021.
Lead managers for the issue were BNP Paribas, JP Morgan and Raiffeisen Bank International.
Issued by subsidiary Telekom Finanzmanagement, the bonds are guaranteed by the parent company. They form part of TA’s €2.5bn EMTN programme listed on the Luxembourg Stock Exchange.
TA said the offering generated strong demand from primarily European investors, resulting in an order book totalling more than €5bn.
CFO Hans Tschuden noted that the transaction marks TA’s seventh successful issuance in the eurobond market.
“The favourable conditions make this bond the preferred option for financing the spectrum costs,” he said, noting that the 3.125% coupon lies significantly below the company’s average cost of debt.
Standard & Poor’s, which downgraded TA from BBB/A2 to BBB-/A3 after the spectrum auction, said in a short statement yesterday that this rating remains unchanged. According to S&P, it primarily reflects the “marked deterioration” of TA’s credit metrics as a result of the high spectrum costs.
The ratings agency calculated that TA’s agency-adjusted debt-to-EBITDA ratio will consequently increase by about 0.8x to about 3.6x by year-end.
T-Mobile Austria CEO Andreas Bierwirth said yesterday that the company intends to appeal the results of the spectrum auction, which raised €2bn for the state, arguing that fundamental flaws in the process led to excessively high prices. A TA spokesperson said the company has not yet decided whether or not to appeal.
