UPDATE: Vodafone Mulling Australian Debt Issue - Source

15th Jul 2010 06:18

(Adds background on Vodafone) By Enda Curran Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--Vodafone (VOD.LN) is considering offering Australian dollar-denominated debt, a person familiar with the matter said Thursday. Such an offer by the British telecoms giant would be a significant development for Australia's fixed income market given it is almost wholly dominated by domestic bank issuance, with bonds from nonfinancial companies few and far between. While foreign banks and government-backed agencies do sell bonds in Australia, the issuance of term debt securities by local or offshore companies are rare despite the country boasting a A$1.1 trillion pension savings pool and a fixed income investor base hungry to diversify. Spurring renewed interest in Kangaroo bonds, or debt sold in Australian dollars by foreign issuers, has been a sharp move in the cross currency basis swap making it more attractive to swap Australian dollars into a borrower's local currency. Vodafone, rated A- by Standard & Poor's, has issued in Australia before and has A$265 million worth of debt maturing in January 2013. The company has a large presence in Australia: Its Vodafone and Hutchison Telecommunications joint venture operates the Vodafone and 3 mobile networks and competes with Telstra and Singapore Telecommunications' Optus in the mobile phones market. Discussions on the possible bond offer, which are still in their early stages, are centering around a seven-year maturity with price talk of around 170 basis points over swap, the person familiar with the matter said. "The market would look upon this quite well," one fund manager said. No further details were immediately available and a spokesperson for Vodafone wasn't immediately available to comment. -By Enda Curran, Dow Jones Newswires; 61-2-8272-4687; [email protected] (END) Dow Jones Newswires July 15, 2010 01:18 ET (05:18 GMT)