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Telefonica Opts for Higher Costs to Appease Hybrid Investors

  • New green junior bond at 7.125% yield gets big order book
  • Telecom firm seeks to buy back two hybrids ahead of call dates
Updated on

Telefonica SA had to pay a punchy coupon of more than 7% as it sought to replace some subordinated notes early, showing the soaring cost of maintaining clout with hybrid bond investors.

The Spanish company got more than €4.75 billion ($4.9 billion) in orders for a €750 million green hybrid bond on Monday at a final yield of 7.125%, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. The huge demand meant pricing was reduced from an opening target range, although it’s still the highest coupon for an existing Telefonica bond in euros.