Telefónica Deutschland to sell bonds

04 April 2013 |


Telefónica’s German subsidiary plans to sell its euro-denominated bonds and take full advantage of the country’s lower borrowing costs, according to Bloomberg.

Telefónica Deutschland hired several international banks to advise the sale which is said to be a standard size of at least €500 million.

CFO at the company, Rachel Empey, and Victor Garcia-Aranda, head of investor relations are reportedly meeting with potential investors in Munich, Frankfurt, Zurich, Paris, Amsterdam and London this week to discuss terms of the transaction.

The sale is expected to help repayments of a €1.25 billion loan Telefónica made to its German division to fund the €4.3 billion dividend it received in September last year.

Parent company Telefónica, thought to be Europe’s most indebted telecommunications company, is borrowing through Telefónica Deutschland in a bid to recover debts of €51.3 billion it reported at the end of 2012.

“Telefónica is clearly seeking to tap the bond markets through its German unit to raise financing at lower costs compared to Spain,” Francisco Salvador, Madrid-based strategist at FGA/MG Valore, told local reporters.

“They can afford that because Telefónica Deutschland isn’t too leveraged.”

The sale of Telefónica Deutschland’s bonds follow reports earlier this year of a slow in the company’s wireless revenue growth.