* Greece’s biggest telecom to issue new bonds
* Plans to refinance existing debt, buy back old bonds
* Credit markets for Greek companies thaw, at steep price
ATHENS, Jan 29 (Reuters) - Greece’s biggest telecoms company OTE is to issue about 500 million euros ($673 million) of five-year bonds this week, in a sign of improving financing conditions for Greek companies.
OTE is the latest Greek company to announce it is refinancing debt as conditions pick up after Athens secured bailout funds, allowing it to push back repayment further into the future when the country’s economy may have emerged from recession.
OTE’s five-year, fixed-coupon bonds will refinance a planned buyback of bonds maturing in 2013 and 2014 at 100 percent and 102 percent of face value respectively, the company said.
“The total amount of bonds to be bought back will be determined within the next days and will depend on the successful completion of the new bond issue,” the company said.
An OTE official who declined to be named said the company planned to raise about 500 million euros. BNP Paribas, Deutsche Bank and HSBC were mandated for the deal.
“Credit conditions for Greek companies are thawing,” said an Athens-based analyst who declined to be named.
Greece secured bailout funds from its international lenders last month, easing fears that it would default and be forced to leave the euro.
On Friday, Hellenic Petroleum, Greece’s biggest refiner, said it secured 605 million euros in fresh three-year bank loans to replace debt maturing later in the year.
Titan, Greece’s biggest cement company, last month exchanged 200 million euros of debt for longer-term bonds.
Major Greek companies’ credit rating had deteriorated after the country’s debt crisis broke out in late 2009, which brought its government to the brink of default.
OTE, southeast Europe’s biggest telecoms company with a ‘Caa1’ rating from Moody’s and ‘B-’ from S&P, has about 1.3 billion euros of bonds maturing by April 2014. It had a total net debt of 3.07 billion euros at the end of the third quarter.
The company, part-owned and managed by Germany’s Deutsche Telekom, has declared debt reduction as a major goal and plans to sell its satellite unit HellasSat and its Bulgarian cell phone subsidiary Globul later this year to reduce its borrowings.
Yet debt refinancing costs for Greek companies remain high. Titan last month exchanged the 200 million euro, 6.9 percent bonds due in July for four-year debt paying a fixed coupon of 8.75 percent. Hellenic Petroleum did not say what interest its fresh loans carried.
“Debt is refinanced, but at a higher price,” the analyst said. “The major breakthrough for Greek companies will come when they manage to raise fresh debt to fund new operations,” he added. ($1 = 0.7429 euros) (Reporting by Harry Papachristou; Editing by David Holmes)