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Pronto, are the bills in?

       
David Meade

Securitizing telephone bills could become the new wonder medicine for stricken European telecoms companies to reduce their debt burden. An asset-backed transaction offers the invaluable advantage of not increasing a company's debt ratios - as do normal bonds - and it also generates financing at a much more attractive price, with spreads roughly 20-30 basis points lower than secondary level single-A telecom straight bonds. As for equity, deals are going to be a tough sell for telecom companies with their shares prices at all time lows. They are therefore increasingly looking into selling their future revenues.


This is nothing new. Emer-ging markets telecom compa-nies, notably Mexico's Telmex, as well as US telecoms such as AT&T, Motorola and Sprint have been regular issuers of ABS paper.


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