LONDON: Telefonica's 3.4 billion pounds ($5.4 billion) syndicated loan refinancing, which extends the maturity of its debt, has closed successfully after 37 banks joined the deal, banking sources said on Tuesday.
The deal was oversubscribed and lenders' commitments were scaled back when the deal allocated this week, the sources said.
The three and five-year term loan and revolving credit refinances the remaining loans from the 18.5 billion pounds syndicated loan taken to back Telefonica's acquisition of UK-based O2 in 2005.
Telefonica declined to comment.
The loan has a dual English and Spanish law structure that allows banks to use it as collateral to raise funds from the European Central Bank's LTRO repurchase facility.
Under the LTRO, banks are given long-term cash in exchange for collateral, easing the pressure on them as they seek to raise capital in order to hit mid-2012 regulatory targets.
Telefonica's loan comprises a 2.1 billion pounds forward start facility, which will be used to extend the maturity of existing loans to December 2015 when they mature in December 2012, and a new 1.3 billion pounds revolving credit facility that will mature in February 2017.
Lenders were attracted by relatively high pricing on the deal, which offered a premium for peripheral euro zone economy risk, and reflected the fact that part of the loan is drawn, bankers said.
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