Telecom Italia also throws itself into bonds. Tim has placed on the primary market a bonds of 850 million euros at a fixed rate offered to institutional investors, with a 6,875% efficiency, down from the initial 7%. Demand has far exceeded supply with 2,5 billion requests.
The date of deadline of the bond is as at February 15, 2028, with an issue price and a redemption price equal to 100%. It will be listed on the Luxembourg Stock Exchange.
“Proceeds from the new issue will be used to optimize and refinance existing debt maturities,” explains a note from the group. "The regulation of the bond contains some typical commitments for transactions with these characteristics, among which, the limitation to grant guarantees on its assets or to carry out extraordinary corporate transactions, if not in compliance with certain parameters".
The operation is led by Goldman Sachs and Jp Morgan as Global Coordinators and Physical Bookrunners. Bnp Paribas, Credit Agricole, Unicredit, Sumitomo Mitsui Banking Corporation and Mitsubishi UFJ Financial Group are the joint bookrunners.
Tim places 850 million bonds, but for Moody's the outlook is negative
After the placement of the 850 million Tim bond, she intervened Moody's Investors Service cha assigned a B1 rating to the senior unsecured bond with a negative outlook.
The proceeds of the issue will be used to "increase liquidity after the repayment of the 1 billion senior unsecured MTN bonds maturing on January 16, 2023 and to partially refinance the next maturities in 2023", writes Moody's in a statement adding that Telecom Italy had "adequate liquidity in December 2022, with expected liquidity of €5 billion and €4 billion in the senior unsecured revolving credit facility (RCF) maturing in 2026". The operation marks the return of the former public monopolist to the bond market for the first time since January 2021, a fact that "helps liquidity management".
“The transaction is leverage neutral and allows Telecom Italia to bring forward the maturity of its debt payments to 2023 at a time of significant refinancing needs. However, due to changed market conditions, interest rates on new senior unsecured debt are likely to be higher than retired debt, negatively impacting cash flow,” commented di Ernesto Bisagno, VP-Senior Credit Officer of Moody's and lead analyst of Telecom Italia.
The agency then specifies that the group "will probably produce a negative free cash flow of approximately 200 million euros in 2023 and has significant debt maturities of approximately 9 billion euros in the period 2023-24 (including IFRS 16 liabilities)" .
Fitch, however, assigned the bond an expected rating of BB-.
The words of Labriola (ad Tim)
“Today's successful bond placement is the result of the profound change that was initiated over the past year. This operation is proof of the trust that the market has in our Company”, said the CEO labriola adding that “the strong demand recorded by investors is the best response to the commitment shown by all the operational components of the group for the achievement of the pre-established objectives and constant management improvements”.
"The funding raised strengthens the Group's liquidity position and allows us to support the country's ambitious investment plan in innovation and technological development", he concluded.
