“We’ve been waiting for two years, but finally the name of the game in 2006 for corporates is M&A refinancing,” says Arnaud Achour, head of origination, debt capital markets, at SG.
The airlines must be considering increasing the prices of business class seats from London to Madrid, such is the regularity of bankers’ visits to Spain. And it’s not just Citigroup, Goldman Sachs and Royal Bank of Scotland – the three arrangers of the acquisition funding for Telefónica’s purchase of UK mobile phone network O2 that are building up air miles. Telefónica has many investment banking mouths to feed and has met with many relationship banks to hear their advice on how to cope with its newly acquired debt pile.
Some of the refinancing mechanics are already in the public domain. Out of the overall £18.5 billion ($32.6 billion), only £12.33 billion – the size of the 364-day A tranche facility – needs to be refinanced in the coming 12 months. The tenor of the £6.167 billion B tranche is three years, giving the borrower ample time to term out this portion of its debt.
Without this Telefónica deal prospects for euro-denominated investment-grade supply would be relatively poor.