| LONDON, April 4
LONDON, April 4 Telefonica's German
unit is expected to print a euro-denominated bond of
medium-length maturity next week, two sources close to the
company said on Thursday.
Telefonica Deutschland appointed Bank of America Merrill
Lynch, Bayern LB, Commerzbank and UBS last week to organise
investor meetings, which began on Tuesday.
One of the sources said the company would host an investor
call related to the issue on Monday and that the bond could
print as soon as Tuesday. The source added that the bond would
have a maturity of between five and seven years.
A spokesman for Telefonica in Madrid declined to comment.
The bond issue would be a first for Telefonica's German
subsidiary since the group floated the Munich-based business in
October 2012 to raise money as part of a debt-cutting drive.
The subsidiary will not have to pay investors to compensate
for risk as Telefonica might have to, as it is based in
relatively robust Germany, rather than recession-hit Spain.
Telefonica Deutschland had 842 million euros ($1.08 billion)
of debt at end-2012, equivalent to a debt to operating income
before depreciation and amortisation (OIBDA) ratio of 0.7.
Telefonica's ratio stood at 2.36 at the end of last year, higher
than many of its sector peers.
The Madrid-based parent company sold a number of assets last
year, including part of its stake in China Unicom and
call centre business Atento to reduce its net debt from over 58
billion euros at end-June to 51.3 billion euros by the end of
However, Telefonica has taken advantage of friendlier debt
market conditions for southern European corporates in recent
months to issue paper, including a 1.5 billion euro ten-year
bond in January.
The Spanish company has said it will reduce its debt to
under 47 billion euros by the end of 2013. The company raised
975 million euros last week by selling its treasury stock.
($1 = 0.7783 euros)
(Additional reporting by IFR Markets in London, Clare Kane in
Madrid and Harro ten Wolde in Frankfurt; Writing by Clare Kane;
Editing by Helen Massy-Beresford)