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Deutsche Telekom's slow progress in
selling
assets has worried the ratings agencies |
Should credit investors be starting to look favourably at
European telecom bonds despite the volatility of the market?
Immediate indications suggest not. There are still credit concerns
about France Telecom's contingent liabilities and at Deutsche
Telekom deleveraging is making slow progress. Vodafone faces
questions about whether goodwill from acquisitions is overstated on
its balance sheet.
Technical factors are also worrying investors. The frantic hedging
efforts of bank lenders committing themselves to France Telecom's
e15 billion ($13 billion) syndicated refinancing facility last
month blew out the company's spreads in the credit default swap
market, spooking bondholders.
Some analysts take all this on board but are fundamentally
optimistic. "It's a really frenzied environment at the moment",
says Satyajit Chatterjee, a TMT fixed income credit research
analyst at HSBC. "Credit default swaps have driven spreads wider as
a result of negative news flow from...
