Vodafone share price: Telco issues convertible bonds to fund Liberty deal

Vodafone (LON:VOD) is aiming to raise €4 billion with convertible bonds as it looks to fund its deal with Liberty Global, the blue-chip telco has said. The FTSE 100 group inked the €18.4-billion deal in May last year, agreeing to acquire Liberty’s operations in Germany, the Czech Republic, Hungary and Romania.

Vodafone’s share price has climbed higher in London in today’s session, having gained 2.48 percent to 134.62p as of 13:47 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.61 percent higher at 7,178.15 points. The group’s shares have lost over a third of their value over the past year, as compared with about a one-percent gain in the Footsie.

Telco issues bonds

Vodafone announced in a statement today that it was planning to raise approximately €4 billion through the issuance of sterling-denominated mandatory convertible bonds. The bonds will be issued in two tranches, maturing no later than March 2021 and March 2022.

The blue-chip telco explained that it would use the net proceeds from the bonds as part of the financing of the acquisition of Liberty Global’s assets. Vodafone said that it has the potential to buy back shares to mitigate dilution.

Analysts on Vodafone

HSBC, which rates the FTSE 100 group as a ‘hold,’ lowered its price target on the stock from 180p to 160p last week, while Numis Securities continues to see the telco as a ‘buy,’ valuing the shares at 220p. According to MarketBeat, Vodafone currently has a consensus ‘buy’ rating and an average price target of  197.21p.

Bank of America Merrill Lynch lifted its rating on the blue-chip telco earlier in February, arguing that headwinds are already ‘baked in’.

As of 14:10 GMT, Tuesday, 05 March, Vodafone Group plc share price is 134.62p.