Spanish Power Securitizations Heating Up
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Two securitizations from Spanish power companies are in the pipeline, one of which will be Spain's first whole business securitization, say London- and Madrid-based bankers. The first deal out of the blocks will be the whole business securitization, a E700 million deal to be lead by Bank of America. The second will be a E350 securitization of trade receivables from Union Electrica Fenosa, lead managed by Santander Centro Hispano. It will be the first term securitization of trade receivables completed in Spain.
"The market [for corporate securitizations] has a lot of future, but it is a very hard call to say when more deals will come," notes one banker who specializes in the Spanish market. These power deals, however, will be landmarks because they will set blueprints for other deals to be done, he notes.
Another deal being discussed in the market, is a potential pooled securitization by Iberdrola, Endesa and Union Fenosa. Last year, the Spanish government did not permit the utilities to raise prices to retail customers, but has since said they can collect approximately E1 billion in so-called tariff deficits from customers over the coming years. The idea, notes Marc Watton, a utilities analyst at BNP Paribas in London, is for the companies to collect the proceeds, which have been effectively guaranteed by the government, up front via a securitization. He says there has been talk of a pooled deal or several single deals.
The whole business deal will be a securitization of former Iberdrola transmission assets, which were sold to CVC Partners and Red Eléctrica de España late last year. The deal will ring fence the cash flow generated by the transmission network to refinance the bridge loan originally used to purchase them. The deal will, in some ways, replicate the whole business securitization methods used in the U.K. water deals, according to a banker working on the deal.
Union Fenosa's securitization will not hit the market until at least the second half of the year. The special purpose vehicle has been established, say the bankers, but legal and structuring obstacles are slowing down the process. The deal will securitize receivables from retail customer's monthly bills and is separate from the tariff deficit deal, as the money raised has already been earmarked to pay down bank debt.
Steve Gandy, head of securitization at BofA in London, declined to comment, saying it is too early to discuss the deal. Calls to Carlos Gomez Tarparo, head of corporate securitizations at Santander in Madrid, were not returned.