By Paul Deckelman
New York, Nov. 25 – The Hellenic Telecommunications Organization priced a €350 million issue of four-year bonds (Caa2/B+) Wednesday, the company said in a news release.
The bonds were upsized from the originally announced $300 million.
The 4 3/8% bonds priced at 99.106 to yield 4 5/8%, a market source said.
That was inside the 4¾% anticipated yield that was originally talked around the market when the deal was first launched late Monday, though in line with later talk in the market.
The issue was twice oversubscribed, the company said, and according to market sources, the investor base included a sizable number of domestic Greek investors, including many holders of two series of existing bonds the company is tendering for.
The bond deal came to market via joint bookrunners Citigroup Inc., Deutsche Bank AG and HSBC Holdings plc.
It was marketed to potential investors by means of a conference call on Monday, shortly after the Athens-based telecommunications company, which is also known as OTE Group, announced that its British-domiciled OTE plc financing unit – the bonds’ issuer of record – would tender for its existing bonds due in May of 2016 in February of 2018 and would be doing a new bond deal.
Market sources said the company would accept tenders of up to €250 million of the May 2016 bonds and up to €50 million of February 2018 bonds. The company said that the final amount of notes to be accepted under the tender offer would depend upon the success of the new bond deal, and that holders of the May 2016 bonds who are allocated in the new bonds would be given priority in having their existing bonds accepted under the tender offer. The tender offer is scheduled to expire on Friday.
The new bonds were sold under OTE plc’s global medium-term note program.
In a regulatory filing on Tuesday, the company said that the stabilization period for the issue was expected to run for a month, through Dec. 24.
The issue would have an over-allotment facility for up to 5% of the aggregate nominal amount.
The bonds are not callable, nor is there any equity clawback provision. There is a change-of-control clause in the bonds’ indenture.
The securities were not marketed to investors in the United States.
Most of the proceeds from the bond offering will be used to finance the tender offer for the two series of existing bonds, with a portion of the proceeds also earmarked for financing the company’s investment plan, which includes further development of Greece's telecommunications infrastructure.
OTE is the largest telecom operator in Greece. It provides fixed-line phone service such as voice, broadband, data and leased lines, as well as pay-TV, ICT services and mobile telephony services in Greece and Romania, and mobile telephony services in Albania.
The chairman and CEO of OTE Group, Michael Tsamaz, said in the company’s news release that the issue was “the first new international bond issue by a Greek corporate, for over a year.”
OTE also had the last previous Greek corporate issue to hit the capital markets, back in July 2014, when it sold some €700 million of 2020 notes.
Tsamaz called the successful new bond offering “a vote of confidence of the international capital markets to both OTE and the country. The demand for the new bond is an acknowledgement of our strategy as well as of the stabilization and prospects of the Greek economy.”
In assigning the issue a Caa2 rating with a stable outlook earlier this week – a higher rating than the Caa3 rating that it gives to Greek government sovereign debt – Moody’s Investors Service noted that OTE’s ratings “reflect (1) the fact that a non-Greek financial subsidiary (OTE plc, which is domiciled in the U.K. and subject to English law) issues its debt; (2) the fact that around 25% of OTE's revenues and 20% of its EBITDA are generated outside Greece; (3) Moody's expectation that OTE will maintain substantial cash balances of around €1 billion to pre-fund future bond maturities; and (4) the implicit support it receives from its largest shareholder, Deutsche Telekom AG (Baa1 stable).”
However, the ratings agency also noted that “despite performing in line with its business plan and taking steps to insulate itself as much as possible from the Greek economy, the [Caa2 Greek] foreign-currency ceiling exerts pressure on the telecom company's ratings, keeping its credit-worthiness closely linked to the economic environment in Greece.”
| Issuer: | OTE plc, a subsidiary of OTE Group (The Hellenic Telecommunications Group)
|
| Security description: | Fixed-rate bonds
|
| Amount: | €350 million, upsized from €$300 million
|
| Tenor: | Four years
|
| Joint bookrunners: | Citigroup Inc., Deutsche Bank AG, HSBC Holdings plc
|
| Co-managers: | Alpha Bank, Eurobank Ergasias, National Bank of Greece, Piraeus Bank
|
| Coupon: | 4 3/8%
|
| Price: | 99.106
|
| Yield: | 4 5/8%
|
| Call protection: | Non-callable
|
| Equity clawback: | None
|
| Change-of-control clause: | Yes
|
| Trade date: | Nov. 25
|
| Settlement date: | Dec. 2
|
| Distribution: | No U.S. distribution
|
| Marketing: | Brief roadshow, including conference call
|
| Price talk: | 4¾% originally, 4 5/8% later on
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