LONDON, Oct 8 (Reuters) - German utility E.ON is seeking a 5 billion euro ($6.79 billion) syndicated credit facility to refinance an existing 6 billion euro facility, the company said in an emailed statement on Tuesday.
The financing, which is expected to remain undrawn, is a pure back-up facility for E.ON’s commercial paper programmes and also serves as a liquidity reserve. The facility can also be used for general corporate purposes.
Competitive loan market conditions, especially in Germany, have seen many high grade borrowers return to the loan market early to lock in liquidity at low prices, banking sources said.
E.ON’s financing is for five years and includes two one-year extension options. The facility pays a margin of 27.5 basis points (bps) over EURIBOR, matching the level achieved on German carmaker Daimler’s 9 billion euro loan refinancing that signed in September.
E.ON is looking to replace a 6 billion euro credit facility that was originally agreed in 2010 and which was due to mature in October 2015. That loan paid a margin of 47.5 bps over EURIBOR.
The loan has been launched to E.ON’s relationship banks via coordinating banks Commerzbank and UniCredit, banking sources said.
Responses are due in the first week of November, one of the banking sources said, and the financing is expected to be signed later that month. ($1 = 0.7368 euros) (Editing by David Cowell)