BBVA has placed a hybrid bond issue for Telefónica, with great interest from foreign investorsMarch 25, 2014
BBVA Corporate & Investment Banking has acted as joint bookrunner in the placement of two debt tranches of hybrid bonds issued by Telefónica amounting to €1.75 Bn. Demand for the issue totalled €6.0 Bn, with particularly strong interest from countries outside Spain, which accounted for 90% of the total.
Due to the heavy demand, the first €750 Mn tranche, due after six years, was sold with a 5% annual interest rate. The other €1.0 Bn tranche, maturing after 10 years, obtained a final interest rate of 5.875%. These percentages are in the lower range of the initial price guidance.
Approximately 400 investors took part in the issue. The two tranches were particularly sought by UK and Irish investors - which accounted for 36% of the first tranche and 35% of the second. German, Spanish, Swiss and Benelux investors bought both bond tranches; while Scandinavian and Italian investors were particularly drawn to the first tranche; and Portugal and a number of Asian countries focused on the second tranche.
In both tranches, the pattern was roughly similar, with fund managers accounting for most of the acquisitions - 54% and 69%, respectively - followed by banks, insurance companies and pension funds, and, lastly, hedge funds.
Telefónica once again entrusted BBVA with placing this hybrid debt. It also did so in September 2013, which was the first time the company used this type of debt; on that occasion, the issue also amounted to €1.75 Bn.
The other bookrunners in this issue, in addition to BBVA, have been Barclays, CaixaBank, Goldman Sachs, Mizuho, Royal Bank of Scotland and Santander.