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The Price Of Being First

08 January 2019 by lberuti

The busiest sector in Europe was TMT. Once again, this flurry of activity was a consequence of bond issuance, which is the overriding theme since the beginning of the year. TITIM ( Telecom Italia SpA ) sold the first bond of the year in the European high-yield market. It brought a €1.25Bln 5-year transaction and set the terms for it to be a success, offering a 0.7% yield concession to existing bonds with a similar maturity. It was justified as the company was the first to test investors’ appetite in what is still a volatile market. The discount offered a decent entry point to credit investors who so far had been wary of the ongoing battle between the company’s main shareholders and who realised last year after the scrapping of its debt reduction target by TITIM that it was not about to bounce back to an investment grade rating. The newly issued bonds traded well and ended the day wrapped around par, while they were issued at 99.436, but it pushed TITIM’s 5-year CDS 20bps wider at 330bps.