Record debt deal for British Telecom
By Rachel Koning, CBS.MarketWatch.com
Last Update: 1:52 PM ET Dec 5, 2000
NEW YORK (CBS.MW) -- British Telecommunications PLC sold $10
billion in bonds on Tuesday, the largest dollar-denominated offering to
ever hit the corporate debt market.
The sale of the bonds, with maturities running five, 10 and 30 years, is
second only in size to the $14.6 billion multi-denominational offering
launched earlier this year by Deutsche Telekom (DT: news, msgs) .
Proceeds will go to pay off short-term debt held by the United Kingdom's
largest phone company and to buy third-generation mobile phone licenses
-- the reason that telecom operators have been busy flooding the
corporates market this year.
Traders said the British Telecom deal was well-subscribed -- particularly
so since the company fattened up yields in order to lure investors in light
of the default-blemished state of the corporate bond market.
Agreeable terms
Against this backdrop, British Telecom (BTY: news, msgs) offered as
much as 25 basis points more in yield should its debt be downgraded two
or more notches.
The heavily indebted company announced its total paper outstanding will
reach $43.3 billion by March, up from $27 billion at the end of
September, before slipping to just under $29 billion the end of 2001.
The company sold $3.1 billion of 7.625 percent
5-year notes yielding 7.664 percent, $3 billion of
8.125 percent 10-year notes yielding 8.149
percent, and $2.8 billion of 8.625 percent 30-year
bonds yielding 8.687 percent.
The respective yields were 225, 265 and 300
basis points above those on U.S. Treasurys with similar maturities, traders
said. British Telecom also sold $1.1 billion of three-year floating-rate
notes.
Moody's Investors Service and Standard & Poor's have this year cut the
telecom carrier's senior unsecured debt ratings to "A2" and "single-A,"
respectively. Both are considered medium investment grades, with
Moody's outlook for the company's debt "stable" and S&P's "negative."
Rachel Koning is a reporter for CBS.MarketWatch.com. |
