(Refiles to change RIC code without changes to the story)
By John Geddie
LONDON, Nov 28 (IFR) - Spain's efforts to get a handle on
its escalating electricity tariff deficit has stepped up after
the fund set up to securitise the debt, FADE, indicated to
dealers that it is adamant on returning to the market after
being locked out for over a year.
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 fund has now sent out a new request for proposals (RFP)
to banks for an unspecified future deal, which banks acknowledge
renders any previous mandate redundant.
"Their actions suggest that the previous mandated lead bank
group has now been disbanded," said one bank source previously
mandated by FADE on the failed deals.
FADE was set up by the Spanish government in 2010 to fund
deficits accrued by utility companies where costs incurred to
supply power are greater than the state regulated tariffs
charged to the end-user.
The RFP sent out earlier this week requires banks to
indicate their underwriting capabilities and fees for a variety
of bond maturities out to 15 years. FADE is now mulling over its
options, but sources state the issuer will want to return as
soon as possible.
"There are not many opportunities left between now and year
end, but it is feasible that FADE could announce a deal in that
time," said the bank source.
FADE had previously mandated Citigroup, Credit Agricole,
Credit Suisse, Deutsche Bank, HSBC and Santander to lead manage
two syndicated bond deals back in 2011. The first of those
emerged in September 2011, an EUR1.5bn 4.4% two-year priced at
98bp over Spanish government bonds. But the second never came to
First the agency pulled a four-year benchmark issue in
January that had been announced to the market with the aim to
price in the region of 70bp over BONOs. At second attempt the
issuer was more discreet, lining up a call with investors on a
Monday afternoon in mid-November but not publicly announcing a
specific deal. Banks close to discussions said they had shown
the issuer some prices for a slated EUR500m-EUR1bn transaction,
and that FADE then decided not to proceed.
Now that deal will never materialise, said banks.
FADE 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
Since its inception, it has completed approximately EUR13bn
of funding, including EUR9.5bn issued through public
syndications and private placements in 2011, according to a FADE
investor presentation updated this month.
In 2012, however, the issuer's debt-raising has stalled. It
managed to raise a respectable EUR3.2bn via private placements
in the first two months of the year but has since only issued a
handful of deals, each in the region of around EUR100m.
In the meantime, the Spanish government has floated a number
of alternative solutions to tackle the deficit, the latest of
which is a draft reform to pass on some of the cost to consumers
via new tax charges.
(Reporting By John Geddie; Editing by Alex Chambers and Julian