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Telecom Italia: successful issuance of sterling and euro bonds for a total of 1.3 billion euro

05/11/2006 - 12:00 PM

The new issue, placed with institutional investors, attracted strong market interest

The sterling issue allowed a lower funding cost than what might have been obtained on other markets for a similar trade

The process of refinancing 2007 debt maturities continues 

Telecom Italia today priced a benchmark bond issue, in Euro and Sterling, aimed at institutional investors, with respective maturities of 8 and 17 years, for a total amount of approximately 1.3 billion Euro equivalent. Both tranches are fixed-rate.

The success of this transaction demonstrates once more the capital markets’ appreciation for Telecom Italia credit, which keeps on being favoured by specialized international investors.

In particular, the sterling issue was carried out with significantly lower costs compared with what might have been obtained on other markets for an issue with similar characteristics.

With this deal, the Telecom Italia Group has refinanced approximately 35% of debt maturing in 2007. At the same time, the investor and currency diversification of the debt’s structure has increased.

The terms are as follows:

Sterling Tranche

issuer: Telecom Italia S.p.a
amount: GBP 400 million
issue date: 19 May 2006
maturity: 19 May 2023
tenor: 17 years
coupon: 5.875%, payable annually
issue price: 99.622%
yield to maturity: 5.826% semi-annually (5.911% annually)

Euro Tranche

issuer: Telecom Italia S.p.a
amount: 750 million euro
issue date: 19 May 2006
maturity: 19 May 2014
tenor: 8 years
coupon : 4.75% payable annually
issue price: 99.156%
yield to maturity: 4.880%

The bond issue is drawn upon the Telecom Italia’s 15 billion Euro Medium Term Note (EMTN) programme and was carried out with the support of the joint bookrunners BNP Paribas, Calyon, Deutsche Bank and HSBC.

Application for the listing of the notes shall be made with the Luxembourg stock exchange.

The securities referred to in this press release have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Milan, 11 May 2006