Telefonica Europe begins capped tender offer for three note series

By Marisa Wong

Los Angeles, Nov. 15 – Telefonica Europe BV launched a cash tender offer for up to a maximum amount of hybrid notes from three series guaranteed by Telefonica, SA, according to a press release.

Telefonica Europe is offering to purchase the following notes:

• €1 billion outstanding undated 5.5-year non-call deeply subordinated guaranteed fixed-rate reset securities with a first call date on March 7, 2023 and current coupon of 2.625% (ISIN: XS1731823255), with pricing to be based on the March 2023 interpolated mid-swap rate and a fixed spread of 100 basis points;

• €1.25 billion outstanding undated 5.7-year non-call deeply subordinated guaranteed fixed-rate reset securities with a first call date on Sept. 4, 2023 and a current coupon of 3% (ISIN: XS1795406575), with pricing to be based on the September 2023 interpolated mid-swap rate and a fixed spread of 120 bps; and

• €1 billion outstanding undated 10-year non-call deeply subordinated guaranteed fixed-rate reset securities with a first call date on March 31, 2024 and a current coupon of 5.875% (ISIN: XS1050461034), with pricing to be based on the March 2024 interpolated mid-swap rate and a fixed spread of 145 bps.

The two series with a first call date in 2023 have priority in acceptance over the third series with a first call date in 2024.

The maximum acceptance amount is expected to equal the principal amount of new notes to be issued under a concurrent offering. Telefonica Europe plans to issue euro-denominated undated 6.5-year non-call deeply subordinated guaranteed fixed-rate reset securities guaranteed by Telefonica, SA.

Subject to the overall cap and the priority acceptance level, the issuer will determine the aggregate principal amount of notes of each series that will be accepted for purchase and reserves the right to accept significantly more or significantly less (or none) of any series, subject to pro rata scaling, as compared to the other series.

The offer will expire at 11 a.m. ET on Nov. 22.

Pricing will be determined at or around 7 a.m. ET on Nov. 23, shortly after indicative results are announced.

Settlement is expected to occur on Nov. 25.

The purpose of the tender offer is, among other things, to proactively manage the issuer’s hybrid capital. The offers also give noteholders the opportunity to switch into the new notes ahead of upcoming first call dates.

The tender offer is conditioned on settlement of the new issuance.

The telecommunications group is based in Madrid.

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