Vodafone (LON:VOD) is looking to raise about €4 billion of hybrid bonds to back its deal with Liberty Global, the Financial Times has reported. The London-listed group inked a €18.4-billion asset deal with Liberty this year which will see it acquire the US group’s cable networks in Germany and eastern Europe.
Vodafone’s share price fell in the previous session, giving up 1.07 percent to close at 166.94p, underperforming the broader UK market, with the benchmark FTSE 100 index ending the session little changed as investors awaited the Federal Reserve interest rate decision. The group’s shares have lost just under a fifth of their value over the past year, as compared with about a three-percent gain in the Footsie.
Vodafone to raise hybrid bonds
The FT reported yesterday that Vodafone had launched a hybrid bonds deal in euro, sterling and US dollars. Hybrid bonds blend debt- and equity-like characteristics in a single security and therefore get classed partially as equity by credit rating agencies. Bankers on the deal told the newspaper that investors had placed orders equivalent to more than €9 billion for the bonds by midday.
Bookrunners reportedly expect to split the deal into a €2-billion tranche, a second smaller €500-million tranche, another one of between $1-billion and $1.25-billion, and an at least £300-million tranche, suggesting that the total size of the deal should be equivalent to at least €3.7 billion.
Telco planning another bond deal
The FT further reports that Vodafone is also planning to raise €3 billion of equity-neutral mandatory-convertible bonds later this year, another structure which aims to be as equity-like as possible to appease credit rating agencies, while at the same time not diluting shareholders.