Market report: Vodafone lift as it dials back debt fears
- Published
Vodafone bounced back from its lowest level in a decade after soothing balance sheet worries with plans to use convertible bonds to fund its huge swoop for Liberty Global’s cable networks across Germany and central Europe.
The company will issue £3.4bn of bonds that will be converted into shares to help engineer its £16bn deal for the Liberty assets without placing more strain on its balance sheet.
The two tranches of debt will turn into equity by 2021 and 2022 and Vodafone told investors that it could buy back the shares to stop investors’ stakes in it being watered down.
Vodafone shares have plummeted amid concerns that the dividend could be cut if the balance sheet is stretched by billions of pounds of debt to fund the deal. Its share price has tumbled 34pc in the last 12 months, wiping £17bn off its market value.
The FTSE 100 giant’s shares started to stage a recovery yesterday as debt jitters receded, gaining 2.6p to 134p. Vodafone and London’s commodity giants did the heavy lifting on the FTSE 100, helping the index rally 49.04 points to 7,183.43. Global markets struggled for direction amid mixed economic data and lower growth targets from China.