Securitizing telephone bills could become the new wonder medicine for stricken European telecoms companies to reduce their debt burden. An asset-backed transaction offers the invaluable advantage of not increasing a company's debt ratios - as do normal bonds - and it also generates financing at a much more attractive price, with spreads roughly 20-30 basis points lower than secondary level single-A telecom straight bonds. As for equity, deals are going to be a tough sell for telecom companies with their shares prices at all time lows. They are therefore increasingly looking into selling their future revenues.
February 01, 2001