VMO2 - comment
We are sceptical that a deal is imminent as Telefonica buying out Liberty’s VMO2 stake would threaten the Spanish company’s Investment grade rating. The possibility of an agreement will support the longer end of the VMO2 curve. The TEF 2036 € trades at 4.25%, whereas the VMO2 2032 € trades at around 6%.
Either company could sell its stake to a third party from 2026, but a deal between the two is the most likely route, as any potential buyer will not want an unhappy partner. Liberty would have no qualms about selling at the right price, but agreeing on a level will be challenging.