RLPC-Telecom Italia eyes 3 bln euro forward-start loan - sources

LONDON Thu Feb 7, 2013 12:57pm EST

LONDON Feb 7 (Reuters) - Telecom Italia SpA is in talks with its banks over a 3 billion euros ($4 billion) loan deal, banking sources said on Thursday, which could help protect the company against possible future turbulence in debt markets.

The five-year forward-start loan will extend the maturity of part of an existing 8 billion euro syndicated loan when it matures in August 2014, the sources said.

The self-arranged financing is expected to launch to existing banks in coming days, the sources said, with Telecom Italia hoping to wrap up the deal before the Italian elections on Feb. 24 and 25, one of the sources said.

Telecom Italia was not immediately available for comment.

Telecom Italia will pay less on its new loan than it did on its 4 billion euro forward-start loan that signed in May 2012. That loan, which also extended part of the 8 billion euro loan, pays a margin of 250 basis points (bps) over EURIBOR.

Improving European loan market conditions mean that Telecom Italia's new forward start is likely to pay an interest margin of between 150 and 190 bps over EURIBOR, banking sources said, with the opening margin expected to be at the higher end of that scale, one of the sources said.

The existing 8 billion euro loan, originally put in place in 2005, paid a margin of just 22.5 bps, but the eurozone sovereign debt crisis meant loan pricing for companies in economies such as Spain and Italy rose dramatically last year.

Telecom Italia follows other companies from Europe's peripheral economies this year in search of more advantageous forward-start loans.

Italy's biggest utility Enel, Spain's Telefonica and Portugal's EDP have all come to the loan market to take advantage of better loan terms to extend the maturity of existing deals. [ID:nRLP77406a ] ($1 = 0.7469 euros) (Additional reporting by Danilo Masoni in Milan; Editing by David Holmes)