UPDATE 1-Spanish agency FADE markets new three-year bond

Thu Nov 29, 2012 3:46am EST

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By John Geddie

LONDON, Nov 29 (IFR) - Spain's Electricity Deficit Amortisation Fund (FADE) is marketing a new three-year euro bond to investors at around 80bp over the Spanish government curve, lead banks said on Thursday.

FADE, rated Baa3/BBB-/BBB, is gathering indications of interest with a minimum EUR500m bond sale expected to follow later on Thursday via lead managers Barclays, BBVA, CA-CIB and Santander.

FADE has twice attempted to print a bond in 2012, but pulled back on both occasions after investor interest waned, forcing up the cost of funding.

The banking group mandated to bring those deals to market - Citigroup, CA-CIB, Credit Suisse, Deutsche Bank, HSBC and Santander - acknowledged that they had been disbanded after the issuer sent a new request for proposals to banks earlier this week.

FADE was set up by the Spanish government in 2010 to fund deficits accrued by utility companies where costs incurred to supply power exceed the state regulated tariffs charged to the end-user.

The fund is committed to alleviating EUR20bn from the balance sheets of Spanish utility companies by taking these so-called tariff deficit receivables and funding them in the capital markets with the strength of an explicit and irrevocable sovereign guarantee. So far, FADE has issued over EUR13bn of bonds, however, most of that was done back in 2011. (Reporting By John Geddie, editing by Anil Mayre)

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