Telefónica, through its wholly owned subsidiary Telefónica Europe BV, successfully completed a e2bn bond offering in February, comprising a 10-year e1.5bn tranche and a 30-year e500m tranche. The transaction was the first euro-denominated 10-year issue by Telefónica since 1999 and also the first euro-denominated 30-year bond it had issued.
It was comfortably the biggest corporate benchmark issued by a Spanish borrower in 2003, providing more proof of the burgeoning demand for longer-dated corporate bonds among European institutions. The initial structure was to include a 15-year tranche, but due to robust demand this was converted to a 30-year tranche.
“The tightening of Telefónica’s existing bonds in the months prior to the transaction, coupled with a demand/ supply imbalance in the primary market and positive investor sentiment toward Telecoms created favourablemarket conditions for Telefónica,” said Pedro Santaella, managing director and head of Barclays Capital in Spain.
Due to strong demand, final pricing for the 10-year tranche tightened from the initial price guidance of 95 basis points over mid-swaps to 93 basis points, while the 30-year tranche tightened five points to 120 basis points over mid-swaps. The transaction was launched and priced within 72 hours of announcement.
