Dutch telco KPN is preparing to issue a subordinated hybrid bond in US dollars following its €1.56bn (US$2.05bn) euro and sterling issue last week.
CFO Eric Hageman has said he is meeting investors in the US this week to discuss the planned issue…
Dutch telco KPN is preparing to issue a subordinated hybrid bond in US dollars following its €1.56bn (US$2.05bn) euro and sterling issue last week.
CFO Eric Hageman has said he is meeting investors in the US this week to discuss the planned issue before moving on to Asia.
In early February, the Hague-based telco announced plans to raise up to €4bn. KPN subsequently agreed with major shareholder America Movil (AMX) to conduct a €3bn rights issue, and to raise the remainder in the form of hybrids.
Last week, KPN announced it had priced a dual-tranche hybrid bond with a €1.1bn (US$1.4bn) tranche and a £400m (US$524.4m) tranche. The deal was six times oversubscribed.
Deutsche Bank, Goldman Sachs and JP Morgan acted as joint structuring advisers and bookrunners for the two-part deal and are reportedly also arranging the new US dollar issue.
Fitch has assigned KPN’s subordinated perpetual and long-dated capital securities a final rating of BB and the proposed US dollar issue an expected rating of BB. The agency noted the US dollar securities have similar terms to the euro and sterling issues, which are deeply subordinated, ranking senior only to the company’s ordinary shares.
Fitch’s ratings for the hybrid securities fall two notches below the BBB long-term issuer default rating it has assigned to the company.
“[This] reflects the securities’ increased loss severity and heightened risk of non-performance relative to the senior obligations,” the agency explained.
AMX has agreed to support the capital increase and, in return, gains two board seats on the Dutch telco’s supervisory board.
A KPN spokesperson declined to comment.
