Telefonica wraps tender for 6.5% notes, capped offer for four series

By Susanna Moon

Chicago, March 21 – Telefonica Europe BV said it will accept tenders for €1,776,575,600 principal amount of deeply subordinated notes guaranteed by Telefonica, SA in the offers that ended at 11 a.m. ET on March 20.

As announced March 13, Telefonica was tendering for six series of notes, including any and all of its €1,125,000,000 undated five-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 6.5% and first reset date of Sept. 18, 2018. The purchase price will be €103,187.67 per €100,000.

Holders had tendered €651.7 million of those notes.

Telefonica also was tendering for a capped amount of five other series of notes and has decided to accept €1,124,875,600 principal amount of the priority 2 notes, according to a company notice.

The acceptance amounts are as follows with pricing to be set using a benchmark rate plus a fixed spread as follows:

• €145.2 million, or 31.57% of the amount tendered of the €850 million undated five-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 4.2%, first reset date of Dec. 4, 2019 and pricing to be set using the 2019 notes interpolated mid-swap rate plus 60 basis points;

• €158.2 million, or 40% of the amount tendered of the €750 million undated six-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 5%, first reset date of March 31, 2020 and pricing based on the 2020 notes interpolated mid-swap rate plus 65 bps;

• £428.5 million, or 100% of the amount tendered of the £600 million undated seven-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 6.75%, first reset date of Nov. 26, 2020 and pricing based on the interpolated mid-swap rate plus 95 bps;

• €332.3 million, or 100% of the amount tendered of the €625 million undated eight-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 7.625%, first reset date of Sept. 18, 2021 and pricing based on the 2021 notes interpolated mid-swap rate plus 100 bps; and

• None of the €1 billion undated 10-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 5.875%, first reset date of March 31, 2024 and pricing based on the 2024 notes interpolated mid-swap rate plus 195 bps.

Pricing was scheduled for 7 a.m. ET on March 21.

Holders also will receive accrued interest to but excluding the settlement date.

Telefonica was holding the offers along with the planned issue of new notes to proactively manage the issuer’s layer of hybrid capital as well as to provide holders the chance to switch into the new notes ahead of upcoming first call dates, according to a previous company announcement.

The issuer plans to price new euro-denominated undated 5.7-year non-call deeply subordinated guaranteed fixed-rate reset securities and new euro-denominated undated 8.5-year non-call deeply subordinated guaranteed fixed-rate reset securities.

The tender offers are conditioned on issue of the new notes.

Settlement is expected to occur on March 23.

The dealer managers are Banco Bilbao Vizcaya Argentaria, SA (+44 20 7648 7516 or liabilitymanagement@bbva.com), BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com), Citigroup Global Markets Ltd. (+44 20 7986 8969 or liabilitymanagement.europe@citi.com), Societe Generale (+33 142 13 32 40 or liability.management@sgcib.com) and Royal Bank of Scotland plc, trading as NatWest Markets, (+44 20 7085 6124 or liabilitymanagement@natwestmarkets.com).

The tender agent is Lucid Issuer Service Ltd. (+ 44 20 7704 0880 or telefonica@lucid-is.com).

Telefonica Europe BV is based in Amsterdam, the Netherlands, and provides financing for Telefonica SA, a telecommunications group based in Madrid.

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