MTN Group returned to the Eurobond market for the first time since 2014 as Africa’s biggest wireless carrier by sales seeks funds for investment.
The mobile phone company is offering a five-year note at a yield ranging from 5,375% to 5,5%, according to a person familiar with the matter, who asked not to be identified because the information is private.
MTN is also marketing a 10-year bond at about 6,5%, the person said, more than 80 basis points over the yield of its outstanding bond due in 2024.
“The initial guidance is quite generous, well over the existing bond, but there’s a lot of economic and regulatory uncertainty in both South Africa and Nigeria,” Richard Segal, a senior analyst at Manulife Asset Management in London, said by phone.
MTN’s bond sale comes after South Africa last week raised US$3bn in its biggest Eurobond offering, taking advantage of demand for emerging market debt.
The company is seeking funds for capital expenditure after the company reported its first-ever half-year loss, partly caused by an agreement to settle a 330bn naira (R14,4bn) fine with Nigerian regulators.
The subscriber base of 233m didn’t grow during the six months through June, while MTN is struggling to repatriate R15,4bn tied up in its Iran unit.
MTN total debt was R22,5bn at the end of 2015, with a debt-to-equity ratio of 14,8%.
“The company has quite comfortable debt coverage ratios,” Alexandre Dray, a credit analyst at Gimme Credit in Tel Aviv, said in e-mailed comments. “MTN is thus ready to increase its cost of debt,” he said, estimating that the carrier could raise as much as $1bn.
Barclays, Bank of America’s Merrill Lynch, Citigroup and Standard Bank Group were joint bookrunners on the latest sales. — (c) 2016 Bloomberg LP
