Telecom Italia shines
13 January 2021 , A rising star despite its fallen angel status
Telecom Italia yesterday issued an inaugural sustainability bond which was priced fair value at best, but still performed due to the greenium (green bond premium) and scarcity value.
The bond issue was €1 billion in size and this was the first time since April 2019 the issuer came to the bond market. Proceeds are to be used on a broad range of ESG type projects.
ESG focused bonds are still rare in the high yield bond market and it's good to see a bellwether as Telecom Italia as a shining example Chris Brils (Portfolio Manager) said. The issuer has been under pressure lately and is categorized as a fallen angel, with bonds downgraded from investment grade into the high yield universe. Just last month Moody’s downgraded the credit rating of Telecom Italia further. However, market position in its home market is strong and in the foreseeable future it could become a rising star and be upgraded back into investment grade territory. On the ESG front however it already appears as a rising star.
ACTIAM regards Telecom Italia as an adaptive company, taking action and making an impact going from grey to green practices, Tessa Eerenberg-van Kesteren, Responsible Investment Officer, said. Good examples are adaptions to the circular economy incl. SIM cards made of a significant amount of recycled plastic, as well as social projects that promote digital inclusion which is extremely important during the pandemic to ensure equal access to the internet.
Telecom Italia S.p.A. (Telecom Italia) operates fixed voice and data infrastructure in Italy, and provides mobile network platforms. The Company focuses on various areas of digital services, including Enriched Communication, Trusted Digital Life, Business Life, Indoor Life, Mobile Open Life and Digital Entertainment (source: Reuters).