** TELEFONICA BOOSTS YIELD ON BOND ISSUE BY 20 BP **
Telefonica SA, Spain’s biggest telephone company, boosted the yield on the bonds
it plans to sell this week after investors balked at the biggest issue in
three years in European telecommunications. Telefonica is selling the equivalent
of about $6.6 billion of bonds to help finance its 17.7 billion-pound ($31.3
billion) purchase of U.K. mobile phone company 02 Plc.
The buyout prompted some analysts to cut their ratings on phone companies and drew investors’
attention to the industry’s worsening credit quality as companies ramp up
borrowing to fund buyouts and growth. European phone companies pursuing
acquisitions may sell as much as $60 billion of bonds this year, according to
Dresdner Kleinwort Wasserstein. They are reversing a trend in place since
credit-rating downgrades spurred companies to focus on cutting
debt instead of boosting shares after a $100 billion, debt-financed acquisition
spree in 2000 and 2001.
Jan 22nd, 2006 at 13:44
[...] It’s been an interesting week in financial markets. Equities reversed their positive note of the first weeks of January, as oil prices made new highs due to the possibility of the Iran situation escalating and disappointing earnings guidance hammering individual stocks. Risk appetite in markets clearly decreased with implied volatility exploding and credit spreads moving higher. [...]