Telefonica Europa has increased its US bond issue to $5.86 billion.
Spain’s Telefonica Europa, the country’s largest telecommunications operator, sold over $5 billion of bonds on Thursday, in the first foray of its kind into the US market. The deal is aimed at raising capital to finance bids for mobile wireless licenses, and it is likely that others will follow suit.
The strong demand for Telefonica’s paper will be an encouragement to other European telecoms companies planning offerings in the future. Telecoms are expected to issue up to $50 billion of bonds in the months ahead, mostly in the US.
The next in line will be Royal KPN; BT and France Telecom will likely follow. But these subsequent debt issues may not prove quite so popular. Telefonica has made the most of its bright credit rating outlook, which stems from its lower acquisition and license costs compared to rivals.
Ironically, Telefonica’s positive ratings make the company an attractive merger target. It has held talks with both BT and KPN in the past. Although the idea of a merger was not well received at the time in Spain, the success of these bonds may renew interest.
