RLPC-Telecom Italia closes 3 bln euro forward start loan

LONDON, March 26 Tue Mar 26, 2013 10:55am EDT

LONDON, March 26 (Reuters) - Telecom Italia has successfully closed syndication of its 3 billion euro ($3.86 billion) forward start loan, which will extend part of an existing syndicated loan when it matures in August 2014, the company confirmed on Tuesday.

The self-arranged five-year financing launched in February before the Italian elections but the ensuing political stalemate does not seem to have affected the financing and it closed significantly oversubscribed. The loan raised 4.1 billion euros from the market from a group of 30 banks coordinated by Royal Bank of Scotland and Banca IMI. The loan will not be increased and banks will be scaled back, banking sources said.

The bank syndicate includes all the major Italian banks with Banca Intesa providing the largest commitment.

The forward start will extend the maturity of part of an existing 8 billion euro loan originally put in place in Aug. 2005. Forward starts allow borrowers to secure future liquidity past the initial maturity date of financing without the risk of an immediate decrease in facility amount.

Telecom Italia will pay less on the new loan than it does on its 4 billion euro forward start 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 and burgeoning lender appetite for new deals mean that Telecom Italia's new forward start pays an initial interest margin of around 200 bps over EURIBOR, banking sources said.

Telecom Italia is rated BBB by Standard & Poor's and Fitch, and Baa3 by Moody's. ($1 = 0.7763 euros) (Editing by Christopher Mangham)