French incumbent Orange has issued about €3bn (US$3.8bn) worth of hybrid bonds, split into three tranches, to finance its acquisition of Spanish fixed-line operator Jazztel.
The operator has priced €1.25bn (US$1.6bn) of 5% notes at 98.9 to yield…
French incumbent Orange has issued about €3bn (US$3.8bn) worth of hybrid bonds, split into three tranches, to finance its acquisition of Spanish fixed-line operator Jazztel.
The operator has priced €1.25bn (US$1.6bn) of 5% notes at 98.9 to yield 5.125%, equivalent to 412.8 bps over mid-swaps. They have a seven-year first call date.
It has also priced a €1bn (US$1.28bn) 4% bond at 99.253 to yield 4.125%, equivalent to 365.7 bps over mid-swaps, with a 12-year first call date.
Finally, Orange has priced £600m (US$980m) worth of 5.75% notes at 99.222 to yield 5.875%, equivalent to 342.6 bps over mid-swaps. They have an 8.5-year first call date.
All three bonds are perpetual. Orange said investors have expressed a stong interest, with total orders of over €11bn.
Lead managers on the offering, which was rated Baa3 by Moody’s, were BBVA, Citigroup, Morgan Stanley and Natixis.
“The bonds will be accounted as equity under IFRS rules and will be granted a total €1.5bn equity credit by rating agencies,” the operator said.
“The issue allows Orange to strenghten its balance sheet at a cost of 4.5%, below the average cost of its existing bonds.”
Orange recently made a €3.4bn (US$4.4bn) bid for Jazztel in an effort to bolster its position in the highly-competitive local market.
The incumbent said it would finance the acquisition by issuing up to €2bn of securities, giving access to its shares, and launching subordinated hybrid bonds.
The telco noted that, given the strength of its balance sheet, the offer was not conditional upon obtaining financing.
