Enel signs 9.4bn euro forward start loan

LONDON: Italy's biggest utility Enel said on Monday that it has signed a 9.4 billion euro ($12.58 billion) forward start loan which will replace an existing 10 billion euro syndicated loan when it matures in April 2015.

Forward start loans allow borrowers to secure future liquidity past the initial maturity date of financing without the risk of an immediate decrease in facility amount.

Enel's new self-arranged five-year revolving credit facility pays a margin of 170 basis points (bps) over EURIBOR depending on rating, the company said, rising to 195 bps on first utilisation and to 225 bps if fully drawn, banking sources said previously.

There is also a commitment fee of 40 percent of the applicable margin on undrawn amounts.

A large group of banks participated in the loan, including Mediobanca, which was documentation agent, Enel said.

The financing, which does not fall under Enel's debt refinancing programme, is available to Enel and to its Dutch subsidiary Enel Finance International N.V.

The undrawn 10 billion euro syndicated loan that Enel is replacing was agreed in April 2010 and paid an initial margin of 85 bps over EURIBOR for a split rating of A-/A2, plus a 50 bps utilisation fee for drawings of over 50 percent.

Enel is now rated BBB+/Baa2.

Enel was forced to pay a generous premium on its 3.2 billion euro, five-year loan refinancing in February 2012, to cover peripheral economy risk and the fact that the loan was drawn. Enel paid a hefty 300 bps on that loan, while similarly rated companies at that time, including Germany's Henkel, were borrowing at around 40 bps.

Other companies from Europe's peripheral economies have sought forward start loans this year. Telecom Italia, Spain's Telefonica and Portugal's EDP have all returned to the loan market to take advantage of better loan terms to extend the maturity of existing deals.