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Telecom’s Italia’s bond showed mixed reactions on the news of the NetCo asset sale, including FibreCorp to KKR. As per the press release, “The binding offer values NetCo (excluding Sparkle) at an enterprise value of €18.8bn ($20bn), without considering any upside associated to the potential transfer of part of the debt to NetCo and to earn-outs linked to the occurrence of certain conditions that may increase the value up to €22bn.” The release adds that the deal will help in reducing Telecom Italia’s debt by €14bn and bring its Net Debt/ EBITDA ratio to less than 2x. As per 2Q results, the gross debt of the company stood at €31.3bn. Prior to the deal, as of end Q2, the company had liquidity of €7.9bn, enough to cover bond maturities till 2024. Post the news, Moody’s has placed the company on review for a potential upgrade.
Telecom Italia’s euro-denominated bonds traded mixed with its 6.875% 2028s trading at 100.5, yielding 6.72%.
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