France Telecom’s imminent €1.5bn bond hits spreads by 7bp

France Telecom’s plans to tap the bond market for the first time this year with a seven-year, €1.5 billion bond issue caused its cost of credit protection on five-year debt to widen by 7 basis points to 280/290bp today.

The issue is expected to take place by the end of this week and follows the French telco’s plans, revealed last week, to reduce its €70 billion debt burden by half within the next three years. It plans to achieve this through a €9 billion state loan, a €15 billion cash increase and €15 billion in cost savings.

Some market sources indicated that France Telecom was also sounding out investors regarding a sterling bond issue. The euro issue is expected to pay 290/300bp over the swaps curve.

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