Vodafone Plans 3 Billion-Euro Convertible Bond Sale

(Bloomberg) -- Vodafone Group Plc plans to sell at least 3 billion euros ($3.4 billion) of securities convertible into shares to help fund its acquisition of some of Liberty Global Plc’s European businesses, people familiar with the matter said.

The sale could be announced as soon as Tuesday, though the timing may still change, the people said. Bank of America Corp., BNP Paribas SA, HSBC Holdings Plc, JPMorgan Chase & Co. and Morgan Stanley have been selected to work on the transaction, they said, asking not to be identified as the details aren’t public. Vodafone could increase the size of the deal based on investor demand, they said.

A spokesman for Vodafone declined to comment. Representatives for Morgan Stanley, Bank of America and JPMorgan Chase also declined to comment. Representatives for BNP and HSBC didn’t have an immediate comment.

"There hasn’t been much issuance in Europe recently so this deal may be well received by investors if it comes with attractive terms," said Ivan Nikolov, portfolio manager at NN Investment Partners. "Vodafone is one of the stronger issuers in the convertible universe."

A transaction of this size is rare for investment banks in in the region this year, with volumes of share sales lagging 2018. Companies and their shareholders in the continent have raised $5.9 billion from stock sales year-to-date, a fraction of the approximately $21 billion worth of stock sold in North America and Asia, according to data compiled by Bloomberg.

Vodafone agreed to acquire Liberty Global’s German and Eastern European units for $22 billion last May, saying at the time that it would sell around 3 billion euros of convertible securities to help fund that transaction.

Chief Executive Officer Nick Read suspended a pledge to keep dividends growing as the company tries to rein in debt after the deal. He is also attempting to partner with rivals in an attempt to cut costs as service providers build infrastructure for fifth-generation wireless networks.

Credit rating firm Moody’s Investors Service cut Vodafone’s debt to Baa2, two levels above junk, from Baa1 because of the Liberty deal.

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