Credit protection on Sonera, Finland's largest telecom operator, tightened by roughly 20 basis points last week after news that the government has approved the telecom company's EUR1 billion (USD881 million) rights issue. The issue will improve the company's fiscal position. Five-year protection on Sonera tightened to roughly 250bps Wednesday as part of a trend that has seen its credit-default levels come in from over 1000bps in September. "They've continued to make good asset sales, they've managed to refinance and now they are doing a rights issue," said one trader in London, adding the bullish feeling has spread to other European telecom names with British Telecommunications and France Telecom also tightening by a similar amount. "Sonera has really driven sentiment on the telecom side," a trader added.
Aidan Fisher, v.p. and senior analyst at Moody's Investors Service in London, noted debt investors have reason to be happy over Sonera's progress. The company announced a prospective rights issue a few weeks ago, which the government, owner of a nearly 53% stake in the company, followed by saying it would back earlier this month. "The market is welcoming the issue as a deleveraging exercise, which from a credit perspective is advantageous as it improves the company's relatively weak balance sheet," he said. The company is rated Baa2 by Moody's and BBB by Standard & Poor's.
Five-Year Credit Protection On Sonera
