French incumbent Orange has agreed to sell US$1.6bn worth of fixed-rate notes in a registered public offering in the US.
The issue consists of US$750m worth of five-year notes with a 2.75% coupon and US$850m worth of 30-year notes with a 5.5% coupon,…
French incumbent Orange has agreed to sell US$1.6bn worth of fixed-rate notes in a registered public offering in the US.
The issue consists of US$750m worth of five-year notes with a 2.75% coupon and US$850m worth of 30-year notes with a 5.5% coupon, the telco said in a statement.
The reoffer spread for the former tranche is 125 basis points over the US Treasury Bond and, for the latter, 187.5 basis points.
Proceeds will be used to repay 4.375% US$1.215bn bonds set to mature in July 2014.
Bank of America Merrill Lynch, Deutsche Bank, JP Morgan, Mitsubishi UFJ and RBS are acting as bookrunners for the offering.
Orange noted that it is continuing to extend the maturity of its debt while reducing servicing costs.
€2.75bn hybrid
Meanwhile, Orange has issued its debut hybrid bond, equivalent to €2.75bn (US$3.77bn) in three tranches.
The subordinated perpetual bonds include a €1bn (US$1.35bn) tranche with a 4.25% coupon and a six-year first call date, a €1bn tranche with a 5.25% coupon and a 10-year first call date, and a £650m (US$1.07bn) tranche with a 5.875% coupon (4.95% after swaps in euro) and an eight-year first call date. The reoffer yields for the three tranches are 4.375%, 5.375% and 6% respectively.
Total orders surpassed €15bn (US$20.27bn), the Paris-based telco said in a statement. Books were 5.6 times oversubscribed on average and 7 times for the longer tranche.
The order book enabled Orange to price the bonds inside guidance, representing a final senior to hybrid average spread of 233 basis points.
Proceeds are to be used for general corporate purposes.
Orange noted that the bonds will be treated as equity under IFRS rules, enabling the company to strengthen its balance sheet at a cost of 4.9%, which is in line with the average cost of its existing bonds.
The transaction forms part of Orange’s plan to diversify its debt funding sources, improve its capital structure and take advantage of attractive market conditions in the hybrid market.
BNP Paribas and Goldman Sachs were global coordinators for the transaction. Alongside these two banks, Credit Agricole, Citigroup, HSBC, ING, Morgan Stanley and Societe Generale were joint bookrunners for the euro offering, while Barclays and Santander were joint bookrunners on the sterling tranche.
