Energias de Portugal placed privately $2 billion of senior notes last month to refinance $3-3.5 billion in bank lines used to acquire Horizon Wind Energy from Goldman Sachs. The deal was EDP's first debt placement in the U.S. and the first debt placement by a Portuguese corporate, according to John Anderson, senior managing director and head of power and project financing at John Hancock Financial Services in Boston, which bought into the deal. Rui Cabrita, a spokesman for the Portuguese utility, did not return a request seeking comment from financing officials.
EDP management never outlined a targeted size for the issue in marketing documentation, says Anderson. "They didn't tell anyone the deal size until the roadshow because they didn't want to announce the deal and not be able to place it." But he says after meeting with investors in New York Oct. 24 and in Boston the next day, buysiders were told EDP was upsizing the deal and would close the books Oct. 25 at $2 billion. Barclays Capital, Citigroup and Morgan Stanley were joint bookrunners and BNP Paribas, Fortis Capital, JPMorgan, Royal Bank of Scotland and Société Générale were co-managers.
The deal comprised a $1 billion, five-year tranche priced with a 5.375% coupon and spread of 140 basis points over Treasuries to yield 5.426%, and another $1 billion, 10-year tranche priced with a 6% coupon and spread of 163 to yield 6.015%. "It was a little bit wide for a U.S. utility at these ratings, but you are paying a little premium for the international nature of the issuer," says Anderson, noting price talk began at 155 on the 10-year notes. The senior notes were rated A2 by Moody's Investors Service and A- by Standard & Poor's and Fitch Ratings.