For telecom companies tussling with rating agencies to
preserve their investment credibility, it's an appealing prospect:
a bond that can be sold at 20 to 30 basis points over Libor, that
will never be downgraded and that could provide much needed working
capital when conventional capital markets are all but closed.
Securitization offers this prospect.
So far, Telecom Italia is the only telecom company to make public
plans to issue a securitized bond. It will raise up to e1 billion
($907 million) in the second quarter of 2001 by selling bonds
secured on fixed-line customer bills. According to bankers working
in the area, however, it's on the to-do list of most of the big
telecom companies. "It's a tough environment out there for telcos
and that's where ABS [asset-backed securitization] comes in," says
Maarten Stegwee, head of securitization at CSFB. Telecom companies
are particularly well suited to ABS...
