Key Takeaways:
Global digital operator VEON is pushing out its debt maturities into the next decade, but at a cost, successfully pricing a $1.4 billion bond offering to refinance nearer-term obligations. The deal, announced May 19, swaps lower-coupon debt for longer-term notes with substantially higher interest payments, reflecting a changed rate environment.
The offering represents a milestone in VEON’s ongoing balance sheet optimization and further reinforces the Company’s access to international capital markets, the company said in a press release. The transaction extends VEON's debt maturity profile, providing greater financial flexibility over the coming years.
The offering, issued by subsidiary VEON Midco B.V., consists of two $700 million tranches. The first tranche carries a 6.95% coupon and is due in 2031, while the second has a 7.45% coupon and matures in 2033. Both sets of senior unsecured notes were priced at par and are expected to receive a BB- rating from both S&P and Fitch.
The primary use of the proceeds is to refinance existing indebtedness. This includes funding a tender offer for up to $750 million of its outstanding 3.375% notes due in 2027. By replacing the 2027 notes, VEON removes a significant near-term maturity wall, but more than doubles its interest cost on that portion of its debt, locking in higher payments for the long term. Application will be made for the notes to be admitted to trading on the Euro MTF market of the Luxembourg Stock Exchange.
This article is for informational purposes only and does not constitute investment advice.
