£3.25bn bond boost for Sky Europe deal

British Sky Broadcasting Group has successfully priced £3.25 billion (equivalent) of Euro and US dollar denominated bonds. Proceeds from the bonds will be available to finance the acquisition of 100 per cent of Sky Italia and 57.4 per cent of Sky Deutschland, which was announced on July 25th 2014.

The four tranches of bonds to be issued are:

  1. €1.5billion Senior Unsecured Notes, coupon of 1.500 per cent, due 2021

  2. €1 billion Senior Unsecured Notes, coupon of 2.500 per cent, due 2026

  3. US$750 million Senior Unsecured Notes, coupon of 2.625 per cent, due 2019

  4. US$1.250 billion Senior Unsecured Notes, coupon of 3.750 per cent, due 2024

As a result, Sky’s gross debt (which stood at £2,589 million at June 30th 2014) will increase by £3.25 billion.

Proceeds of the US dollar bonds will be swapped into Euros, resulting in a cost to Sky of approximately 1.3 per cent for the bonds due in 2019 and 2.4 per cent for the bonds due in 2024.

After all professional, advisory, rating agency and legal fees, the company expects the blended pre-tax cost of the new bonds issued to be less than 2.5 per cent per annum, reducing Sky’s overall pre-tax cost of debt (including all bonds outstanding prior to the announcement of the acquisitions) to approximately 4 per cent per annum

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