Vodafone ready to accept debt rating

LONDON:

Vodafone Group Plc (VOD) told investors it’s willing to accept a lower debt rating in the event the wireless carrier pursues a takeover, according to a summary of a meeting held yesterday. Chief Financial Officer Andy Halford, speaking at a conference organized by Citigroup Inc., said the world’s second- largest mobile-phone company would take a BBB+ rating, the third-lowest investment grade and one step below the company’s A- ranking by Standard & Poor’s, should an opportunity to make an acquisition arise. Vodafone’s readiness to accept a lower rating — which may result from taking on additional debt — means the company isn’t under pressure to sell its 45 percent stake in Chief Executive Officer Vittorio Colao said last month he’d be interested in expanding combined offers of voice, Internet and mobile services across Europe. The company is looking for ways to make its network more efficient as service revenue from wireless customers slips.

The carrier put its plans to approach Kabel Deutschland, valued by the market at 6.2 billion euros ($8 billion), on hold after leaks of a potential offer, people familiar with the matter said last month. Creditdefault swaps insuring Vodafone’s bonds have fallen about 8 percent since Bloomberg reported Feb. 27 that Vodafone had put its Kabel Deutschland plans on hold. They climbed 1.5 percent today to 83 basis points. The derivatives pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point on a contract protecting 10 million euros of debt for five years is equivalent to 1,000 euros a year. Vodafone’s 4.65 percent euro-denominated bond due 2022 fell 0.4 percent to 119.68 cents on the euro. The yield climbed 2.5 percent to 2.17 percent from 2.12 percent.