July 4, 2012 / 11:07 AM / in 6 years

UPDATE 1-Snam considering second euro bond tranche - sources

(Adds guidance, background)

By Josie Cox

LONDON, July 4 (IFR) - Eni spin-off Snam is considering launching a second tranche to the EUR1bn four-year bond that it is currently marketing, several sources told IFR on Wednesday.

Italian gas distributor Snam, rated Baa1/A-, is looking to issue a EUR500m bond that matures in January 2019 as early as Wednesday if the four-year bond prices smoothly, the sources said. They later added that such a bond would likely yield just above 5%.

Earlier on Wednesday, Snam mandated Banca IMI, BNP Paribas, JP Morgan and UniCredit as active leads on the four-year deal, and BoA Merrill Lynch, Citi, HSBC, Mediobanca, Societe Generale, Morgan Stanley and UBS as passive leads.

The guidance on those notes was initially set in the area of mid-swaps +350bp before it was revised to mid-swaps plus 340bp on the back of an order book in the region of EUR4bn.

Snam has been on the radar for some time and last month signed a mandate with 11 banks to structure and subscribe its EUR11bn of credit lines to be able to meet capital requirements.

These include the repayment of its current debt to Eni after the ownership split, and some heavy infrastructure investments.

At the time, bankers said that in the short term the agreement would provide the company with loans based on bank credit, while in the medium term the goal would be to achieve a balanced debt structure via bond issues to a maximum amount of EUR8bn.

Snam joins Eni and Telecom Italia which have over the last four weeks reopened the corporate bond market for peripheral issuers with well-received transactions. (Reporting By Josie Cox; editing by Alex Chambers)

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