Debt capital and ratings

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The Telekom Austria Group actively uses the local and international debt capital markets in order to ensure that its financing is broadly diversified both geographically and in terms of the investor base.

Since its first bond transaction in 2003 the Telekom Austria Group has issued a total of eight benchmark bonds. In 2013 it placed the first hybrid bond in the European telecommunications sector.

A new revolving credit facility with a volume of EUR 1 bn was secured in 2014, which improved on the conditions of the Telekom Austria Group’s expiring credit facility and significantly extended its term.

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Telekom Austria Group outstanding bonds

as of 31 Dec 2014 (Issuer: Telekom Austria Finanzmanagement GmbH. Hybrid bond issued by Telekom Austria AG)

ISIN

Issue Date

Maturity

Volume (in EUR million)

Coupon

1)

Subordinated hybrid bond

XS0210629522

13.01.05

27.01.17

500

4.250%

XS0409318309

19.01.09

29.01.16

750

6.375%

XS0767278301

26.03.12

04.04.22

750

4.000%

XS0877720986

25.01.13

perpetual1)

600

5.625%

XS0950055359

27.06.13

04.07.23

300

3.500%

XS0999667263

26.11.13

03.12.21

750

3.125%

Credit ratings

Telekom Austria AG is regularly rated by Moody’s Investors Service and Standard & Poor’s Ratings Services. On 11 August 2014 Standard & Poor’s upgraded its rating for Telekom Austria AG from BBB- to BBB as a result of the acquisition by América Móvil and the accompanying planned capital increase.

External ratings

 

Moody’s

S&P

Rating

Baa2

BBB

Company outlook

stable

stable

Spread development

The liquidity of corporate bonds generally declines significantly within a certain period following their issuance. As credit default swaps are not affected by this liquidity reduction, it is standard international practice to use five-year CDS when analysing spread development.

In 2014 the Telekom Austria Group’s five-year CDS spread enjoyed a highly positive development. The spread narrowed from around 120 bps (basis points) to around 60 bps over the course of the year, an improvement of 50%. This positive development reflects the more stable operational development of the company as well as the stronger capital structure following the successful completion of the EUR 1 bn capital increase. The narrowing of the credit spread can also be attributed to the generally strong level of demand for fixed income products. The Markit iTraxx Europe Index also declined by 8 bps in 2014, with a range of 30 bps between the low and the high values.

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