Hellenic Telecom Returns to Euro Bond Market in First Issue in Three Years

Hellenic Telecommunications Organization SA (HTO) is selling 500 million euros ($712 million) of bonds in its first offering since 2008 and the second by a Greek non-financial company in more than a year.

Greece’s largest phone company is issuing the notes through its special purpose company OTE Plc, according to Dimitris Tzelepis, head of investor relations. Coca-Cola Hellenic Bottling Co. is the only other Greece-based non-financial company to sell debt this year.

Sales of Greek corporate securities stalled and borrowing costs rose after the country was forced to accept a bailout last year to cover the European Union’s biggest budget deficit. Greece’s economy probably will shrink for a third year in 2011 amid cost-cutting measures that followed its rescue, according to analysts surveyed by Bloomberg News.

“Hellenic Telecom will be viewed as the first real non- financial Greek issuer this year,” said Suki Mann, senior credit strategist at Societe Generale SA in London. “The Coca- Cola Hellenic Bottling tap wasn’t viewed by the market as being exposed to Greece risk and the notes weren’t priced that way.”

Three-Year Bonds

Athens-based Hellenic Telecom’s new bonds will mature in three years and yield 7.375 percent, according to a banker with knowledge of the transaction who declined to be identified because the deal is private.

The phone company sold 2.1 billion euros of three- and seven-year bonds in February 2008 to help finance its purchase of a stake in Cosmote Mobile Telecommunications SA. The yield on the notes due 2015 has fallen to 7.56 percent from 8.17 percent at the start of the year, Bloomberg Bond Trader prices show.

Alpha Bank SA, BNP Paribas (BNP) SA, EFG Eurobank Ergasias, HSBC Holdings Plc and Morgan Stanley (MS) are managing the sale of new Hellenic Telecom notes, Tzelepis said.

Hellenic Telecom, which is 30 percent owned by Deutsche Telekom AG (DTE), posted a fourth-quarter net loss of 91.7 million euros and said it expects sales to be hurt by unfavorable economic conditions in all the countries it operates.

The phone company is rated Baa3 at Moody’s Investors Service, the lowest investment-grade rating, and two levels lower at BB by Standard Poor’s.

To contact the reporter on this story: Ben Martin in London at bmartin38@bloomberg.net.

To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net.

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