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Capital Markets

Local capital markets: Telefónica goes Czech

Telefónica has successfully closed the largest multi-tranche Czech koruna bond issue by a foreign corporate. The main purpose of the transaction was to extend the company’s investor base to Czech investors – a move the Spanish telephone company has been interested in since its arrival in the Czech Republic after it acquired a majority stake in the country’s main telecom operator, Cesky Telecom, in mid-2005.

In the past decade Telefónica has spent more than $80 billion on acquisitions to become the largest former state-run telephone monopoly in Europe. But these ambitious purchases have also left it with €51.9 billion of debt. Having completed this Czech issue, the firm has already hinted at plans to do a yen issue in the coming months to reduce its reliance on European investors and have access to all the major markets. Last year, Telefónica sold $5.2 billion-worth of bonds in dollars, its biggest US debt offering, as part of the long-term financing for the acquisition of British company O2.

Three tranches

This issue, which amounts to Kc8 billion ($380 million), comprises three tranches: one three-year Kc2.4 billion floating-rate note, and two fixed-rate notes – a five-year Kc3 billion and a seven-year Kc2.6

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