China Development Bank provides a €1.5 billion EUR loan to Telefónica Europe for the procurement of telecommunications equipment and related services

Project narrative

On November 28, 2016, China Development Bank Corporation (CDB) entered into a €1.500 billion EUR loan agreement with Telefónica Europe, B.V. — a Netherlands-incorporated wholly-owned subsidiary Spanish multinational telecommunications company Telefónica, S.A. — for the procurement of telecommunications equipment and related services. This loan carried a maturity period of eight years, a final maturity date of November 28, 2024, and had repayment profile of semi-annual installments. Telefónica, S.A. issued a guarantee for this loan. The proceeds were to be used by the borrower to on-lend to Telefónica, S.A. to finance its procurement of telecommunications equipment and related services. On January 24, 2017, the borrower drew down €750,000,000 EUR under this loan. On July 18, 2018, the borrower drew down the remaining €750,000,000 EUR under this loan, making it fully drawn. By June 30, 2019, the facility was to be amended, effective February 15, 2020, that the maturity date would be August 16, 2024 (a reduced maturity period of approximately 7.75 years). On July 11, 2019, the borrower notified CDB of its imminent irrevocable voluntary prepayment of €750,000,000 EUR of the loan's outstanding balance, with the repayment expected to occur on August 16, 2019. Repayment occurred. Then, on October 17, 2019, the borrower notified CDB of its imminent irrevocable voluntary prepayment of €450,000,000 EUR. Repayment occurred. Then, on November 13, 2019, the borrower issued a side letter to CDB to renegotiate the terms and conditions of the remaining outstanding balance of €300,000,000 EUR. However, the parties failed to reach an agreement, and the loan was cancelled and fully amortized (repaid) on December 16, 2019.