VodafoneZiggo raised €2.1bn equivalent via USD and EUR bonds. It raised:
- €750mn via a 10NC6 bond at a yield of 3.5%, unchanged from initial guidance
- $1.525bn via a 10NC7 Sustainability-linked bond (SLB) at a yield of 5.125%, 12.5bp outside initial guidance of 5% area
The bonds have expected ratings of B1/B+/BB (Moody’s/S&P/Fitch) with the issuer being VZ Secured Financing B.V. The proceeds will be used, together with existing cash and cash equivalents, for the redemption of the existing $1.6bn 5.50% bonds due 2027 and €620m 4.25% bonds due 2027 and to pay fees and transaction expenses.
The $1.525bn USD-denominated SLB was priced outside its initial guidance (bonds generally get priced inside initial guidance). There SLB structure has a twist – should the issuer meet the relevant targets/KPIs, the company benefits with redemption amount being decreased by 0.125% along with not having to step-up its coupons. The SLB has a coupon step-up of 12.5bp if the company fails to meet its targets/KPIs that include: (i) reducing Scope 1 and 2 emissions by 50% by 2025 (ii) reducing Scope 3 emissions by 50% by 2025. Both are set against a 2018 baseline.
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