Telecom Italia announces the successful conclusion of its first issue of Asset Backed Euronotes securitised by telephone bill receivables for a total value of €700 million through the company TI Securitisation Vehicle. This is the first issue of such securities ever carried out by a telephone company in Europe.
The demand expressed by investors was greatly in excess of supply, which made it possible to set the margins of the operation at lower levels than those initially indicated, namely 19, 27 and 34 base points above the Euribor respectively on the tranches of €100 million at 18 months, €150 million at 3 years, and €450 million at 5 years.
About 20% of the demand for the euronotes - issued at variable rates and awarded preliminarily ratings of AAA/Aaa/AAA by Fitch, Moody's and Standard & Poor's - came from Italy and the remaining 80% from other countries, especially Spain, France, the UK and Germany.
The operation of securitisation involves a mechanism for the sale of receivables already existing for services supplied to residential and business customers and the top customers of Telecom Italia Wireline Services (TIWS). It is also possible to include analogous receivables from the public administration system. In particular, this initial issue was based on the flow of receivables generated by residential customers (about 21 million lines).
Telecom Italia was assisted in this operation by BNP Paribas and WestLB as lead managers and arrengers and by Finanziaria Internazionale as arranger.
The issue is part of a programme worth a total of €2 billion. It falls within the framework of the plan for the medium-long term refinancing of the Telecom Italia Group's debt, making it possible to attract new types of investor and obtain funding at moderate costs.
Massimo S. Brunelli, CFO of Telecom Italia, comments: "We have carried out a complex and innovative operation which has reiceved a warm reception from the market and which enabled us to select high-quality investors. The high percentage of demand from outside Italy confirms the positive judgment formed at the international level as regards the results of the Telecom Group and the financial strategy it is implementing to consolidate its debt structure."