Italian electricity grid operator Terna SpA (TRN.MI) Monday showed ongoing tensions in Greece have done little to curb appetite for peripheral corporate debt as demand for its five-year paper topped EUR5 billion.
Italian electricity grid operator Terna SpA (TRN.MI) Monday showed
ongoing tensions in Greece have done little to curb appetite for peripheral
corporate debt as demand for its five-year paper topped EUR5 billion.
Terna is set to price a EUR1.25 billion bond at 257 basis points over
midswaps--127 basis points wider than a 10-year deal it priced last March,
highlighting the premium Italian issuers are having to pay since the euro-zone
debt crisis intensified last summer.
That compares with
U.K.
energy company BP PLC (BP), which got a EUR1.25 billion four-year deal at 78
basis points over midswaps Monday. BP is rated A2 by Moody's Investors Service
Inc. and A by Standard & Poor's Corp--both one notch above Terna.
Initial price guidance on the Terna transaction was in the area of 265 basis
points over midswaps.
It is the third benchmark-size deal from an Italian non-financial this year,
following new issues from oil and gas company Eni (ENI.MI) and road-toll
operator Atlantia (ATL.MI).
Eni priced a EUR1 billion, eight-year bond at 220 basis points over midswaps on
Jan. 27, while Atlantia priced a EUR1 billion, seven-year bond at 275 basis
points over midswaps on Feb. 2.
"New issue premiums have dropped over the last couple of weeks, but
there's probably a limit to how tight spreads can go given the background noise
from Greece and the potential for volatility," said a syndicate banker
away from the Terna deal, adding that the latest developments in Athens should
buy the market some time and encourage more issuers to step forward.
Italian corporates have been unable to escape the ratings action on the
country's sovereign debt, with Standard & Poor's Corp. cutting Terna to A-
from A following the two-notch downgrade of Italy last month.
Moody's Investors Service Inc. also lowered Terna to A3 from A2 in October
after it chopped
Italy
's
credit rating by three notches.
Fitch Ratings confirmed Terna's A rating in November but cut its outlook to
negative from stable. Fitch also downgraded
Italy
by
two notches at the end of last month.
BNP Paribas SA, JPMorgan Chase & Co., Deutsche Bank AG, Mediobanca, Natixis
and UniCredit SpA are the lead managers on the Terna deal.
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