Wind blows into high yield market

The Italian telecom operator acquired in a €12.1bn buyout in May 2005 is to begin marketing a €1.25bn high yield bond issue this week.

Wind, the Italian telecom business that was acquired for €12.1 billion ($14.3 billion) in May this year, is to test appetite for high yield as it begins marketing a €1.25 billion issue this week.

Proceeds from the issue will help refinance a bridge loan taken out at the time of the buyout, according to a report in the Financial Times.

The issue comprises two tranches denominated in both euros and dollars in order to tap into demand from European and US investors.

According to the report, the global volume of high yield bond issues dropped to a three-year low in October. Because of this, investors are said to have a lot of cash to invest in the sector.

A statement from the Leveraged Commentary & Data (LCD) unit of Standard & Poor’s said: “Although there are still doubters, sentiment towards the deal among bond investors appears skewed to the upside.”

The issue will be the third-largest by a private equity-backed firm yet seen in Europe. The only larger deals so far were a €1.3 billion issue by Seat Pagine Gialle of Italy last year and a €1.28 billion issue by Tim Hellas of Greece in September.

Wind’s high yield issue is part of a €9.3 billion debt package put together by ABN Amro, Deutsche Bank and Sanpaolo IMI. The package also includes €6.85 billion of senior loans and a €700 million junior loan.

The three lead banks were understood to have been left with around €3 billion of exposure on their books after what the LCD unit described as an “immensely disappointing” senior debt syndication over the summer.

Wind was acquired by the Weather Investments consortium earlier this year. The grouping was led by Egyptian businessman Naguib Sawiris and also included Philippe Nguyen, head of French investment group IPE, and Wilbur Ross, the US distressed investor.