Bond two-times oversubscribed - five and ten year maturities - step-up clause of 0.5 of a percentage point - refinancing to optimise debt structure Following the conclusion of a five-day roadshow through Europe's financial hubs, Deutsche Telekom AG is issuing a two-tranche bond worth 8 billion euros this Tuesday. The issue terms are five and ten years. Orders from the leading banks BNP Paribas, Deutsche Bank and JP Morgan amount to 15.5 billion euros, which means the bonds are nearly two-times oversubscribed. The five-year tranche is expected to account for 4.5 billion euros and the ten-year tranche for 3.5 billion euros, with 30 percent coming from Germany, 17 percent from the UK, 13 percent from Italy and 7 percent from France. The bond issue does not increase Deutsche Telekom's debts. Proceeds from the bonds will be used to replace old loans and optimise the Group's debt structure. The exceptionally good response to the bonds was underlined by the most recent rating adjustment. The agencies Moody's and Standard & Poor's have removed Deutsche Telekom from their "credit watch" lists and given it a rating of A3 (Moody's) and A- (Standard & Poor's) with a negative outlook from both.
This year's bond, like last year's worldwide bond issue, comes with a step-up clause in the event of a down-grading of Deutsche Telekom's rating. The step-up clauses allow for a rise of 0.5 of a percentage point on the coupons if ratings from both Moody's and Standard & Poor's fall below the A-category (A3 from Moody's and A- from S&P). Conversely, the adjustment will be revoked as soon as both ratings have improved to Baa1 (Moody's) and BBB+ (S&P) again.
Listing on the Luxembourg stock market has been requested for the new bonds.