Voda­fone ready to ac­cept debt rat­ing

The Pak Banker - - 6BUSINESS -

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.

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