Eutelsat Secures Major Bond Issuance to Refinance Debt

Eutelsat issues €1.5B in bonds at ~6%+ yields to retire expensive debt, slashing interest costs. LEO revenue jumps 60% as net debt ratio halves to 2.0x after OneWeb merger.

Eutelsat Communications has successfully tapped the bond market for €1.5 billion in fresh capital. The satellite operator’s strategic move is aimed at repaying older, more expensive debt obligations, a step expected to significantly reduce its annual interest burden. This financing round represents a pivotal phase in the company’s financial restructuring following its merger with OneWeb, promising to deliver lasting balance sheet relief.

Operational Performance Shows Diverging Trends

The company’s recent half-year results present a nuanced operational picture. Total revenue reached €592 million, remaining nearly stable on a constant-currency basis. A standout performer was the Low Earth Orbit (LEO) business, where revenues surged approximately 60% to €110.5 million. Fixed Connectivity grew by 17.2% and Mobile Connectivity by 8.5% on a constant-currency basis. However, these gains were offset by a 12.3% decline in the Video segment. The adjusted EBITDA margin contracted to 52.1%, which management attributes to the evolving product mix as the LEO segment scales.

To support this long-term growth, Eutelsat has placed an order for 440 new LEO satellites with Airbus. Furthermore, a multi-launch agreement is already in place with MaiaSpace for missions commencing in 2027.

Bond Issue Details: Two Tranches Above 6% Yield

The capital raise consists of two euro-denominated senior note tranches. The first is a five-year bond maturing in 2031, and the second a seven-year bond maturing in 2033. Initial yield guidance was set at around 6.375% for the shorter-dated notes and 6.875% for the longer-dated offering. Both tranches carry guarantees from Eutelsat S.A. and OneWeb Holdings Limited.

Proceeds from this issuance, combined with €400 million from a previously secured credit facility, will be used to fully redeem two existing bonds. These are a €600 million note carrying a 2.25% coupon (maturing 2027) and, crucially, a high-cost €600 million bond with a 9.75% coupon (maturing 2029). The latter currently burdens the income statement with nearly €60 million in annual interest expense; its retirement is anticipated to markedly lower overall financing costs.

Debt Ratio Halved Amid Broader Financial Restructuring

This refinancing initiative is part of a broader financial overhaul undertaken since the merger. Several key milestones have already been achieved. In December 2025, €1.5 billion was raised through a capital increase backed by core shareholders, including the French and British states and the Bharti Group. Credit rating agencies have responded positively: Moody’s upgraded the company’s rating by two notches to Ba3, while Fitch awarded a three-notch upgrade to BB. An additional €1 billion was secured via export-credit financing.

As a result, net debt stood at €1.3 billion as of December 31, 2025—a reduction of €1.4 billion within six months. The ratio of net debt to adjusted EBITDA improved dramatically from 3.92x to 2.00x.

Annual Forecast Confirmed Amid Reduced Capex

Management has reaffirmed its full-year outlook. Revenue across its four operational segments is projected to remain stable year-on-year, with the LEO business itself expected to grow by 50%. The adjusted EBITDA margin is forecast to be slightly below previous levels. Notably, planned capital expenditure has been revised downward to approximately €900 million, compared to a prior guidance range of €1.0 to €1.1 billion. The company has stated that the terminated sale of its ground infrastructure to EQT at the end of January does not impact the financing of its growth strategy.