Eir is preparing to approach the bond market next week for the first time in more than three years as it lines up financing for a planned buyback of €350 million of expensive debt.
The telecoms group, formerly known as Eircom, is paying a 9.25 per cent annual coupon on debt issued in 2013, a year after the group emerged from examinership with €1.8 billion of its debt at the time written off.
Analysts estimate the company, led by chief executive Richard Moat, could refinance the bonds at an interest rate of as low as 5 per cent, which would shave €15 million off its interest rate bill. It has been able to call in its existing bonds since May 15th.
A final call on how much debt Eir will issue is likely to be made after investor interest has been sounded out early next week. A move would come hot on the heels of State-owed ESB and DAA selling €1 billion of bonds this week amid a deluge of corporate bond sales in recent weeks ahead of the European Central Bank's plan to buy this type of debt from this month.
While Eir’s debt would fall outside the scope of ECB purchases, as it ranks below what ratings agencies call investment grade bonds, interest in so-called junk bonds is rising as fixed-income funds hunt for yield. Eir also has about €2 billion of senior bank borrowings and said last week it was planning an additional loan facility of up to €150 million.
The group had racked up €4.1 billion of gross debt through five ownership changes before it filed the country’s biggest creditor protection petition in 2012. Its most senior lenders wrote off 15 per cent of their €2.4 billion net loans and took control of the company as more junior creditors lost most of their investment.
