The issue results in a lengthening of TI average bond maturity while maintaining the same average cost of debt
Further diversification of investor pool
Telecom Italia announces that Telecom Italia Capital S.A. today successfully concluded the launch of a multi-tranche bond issue for a total of USD 2.6 billion.
The issue is part of the process of refinancing maturing debt and diversification of the investor pool. With this issue, in particular, Telecom Italia will further lengthen the average bond maturity, bringing it to approximately 8.5 years, without any impact on the average cost of debt, which remains at around 5%.
The bond priced today, at costs which are lower than what would be obtainable on the Euro market, was split into three tranches: a 5-year floating rate note, a 5-year fixed rate bond, and a 30-year fixed rate bond.
Demand registered for the 30-year tranche, totalled USD 2.5 billion.
The details of the issue are:
5-year floating rate tranche:
Issuer: Telecom Italia Capital S.A.
Garantor: Telecom Italia S.p.A.
Amount: USD 850 million
Settlement date: 18 July 2006
Maturity: 18 July 2011
Coupon: Three-month USD Libor + 0.61%
Issue price: 100%
Redemption price: 100%
The effective discount margin of the 5-year floating rate tranche will stand at 3-month USD Libor plus 61 basis points.
5-year fixed rate tranche
Issuer: Telecom Italia Capital S.A.
Garantor: Telecom Italia S.p.A.
Amount: USD 750 million
Settlement date: 18 July 2006
Maturity: 18 July 2011
Coupon: 6.20%
Issue price: 99.826%
Redemption price: 100%
The effective yield to maturity of the 5-year fixed rate is 6.338% per year, which corresponds to a yield of 117 basis points above the corresponding US treasury bills.
30-year fixed-rate tranche:
Issuer: Telecom Italia Capital S.A.
Garantor: Telecom Italia S.p.A.
Amount: USD 1,000 million
Settlement date: 18 July 2006
Maturity: 18 July 2036
Coupon: 7.20%
Issue price: 99.440%
Redemption price: 100%
The effective yield to maturity of the 30-year fixed rate tranche is 7.377% per year, which corresponds to a yield of 205 basis points above the corresponding US treasury bills.
The bonds will be issued under the 10 billion dollar ”Shelf Registration” programme filed in August 2005 with the SEC and will be listed on the Luxembourg stock exchange.
This press release does not constitute a solicitation to invest, nor can the sale of these bonds take place in jurisdictions in which their offer, solicitation or sale is not legal, or in other words, with methods or limits different to those allowed by the applicable regulations.
Milan, 11 July 2006