Colombia’s Telefonica Brings Challenging Loan

Amid the stormiest conditions of the year for LatAm borrowers, the Colombian arm of Spain’s Telefonica has launched an A/B loan worth $600m. The IDB and four other bookrunners – Citi, BNP, ABN AMRO and Santander – are syndicating out a $475m 5-year amortizing loan paying 125bp over Libor out of the box, based on a leverage grid, say bankers familiar with the terms. Pricing moves on a leverage grid between 4.0x, where it pays 150bp over Libor, and under 2.5x, where it pays 75bp over Libor. Current leverage is 3.0x-3.5x and the deal has 3 years’ grace. MLAs are being offered $50m tickets for an up-front fee of 50bp. Lead arrangers can take $35m for a 30bp fee, while arrangers can have a $20m ticket for 15bp. Bookrunners are apparently seeking five MLAs. The IDB is also doing a $125m 7-year A loan, which pays 145bp over Libor out of the box. Poor timing will test the deal, which has been waiting in the wings for months. In the past week, credit market conditions have deteriorated further, sapping bank market liquidity at a time when lenders typically close up shop. Given this backdrop, the transaction, whose bank meeting was heard to be underattended, may struggle to gain momentum. Telefonica will likely have to wait until January to wrap up syndication.