Thursday, 22 January 2009

EDF Bond Private Placement May Make it Largest Corporate Borrower in EuropeThis Year

Electricite de France SA, known as EDF, is seeking to place among investors five-, ten- and 30-year debt at 400, 400 and 388 basis points more than equivalent Treasury note yields (or bonds with similar maturities) respectively. The size of each tranche sale is yet to be defined. The company intends to use the proceeds of this offering for the repayment of existing borrowings and the partial financing of acquisitions.

Concern that things will get worse in the marketplace as the recession spreads from the Americas to Europe to emerging markets is forcing the largest borrowers to rush bond sales. Smaller companies are getting crowded out from debt capital markets in the meantime. EDF last week sold 2 billion euros of six-year bonds at a yield of 205 basis points more than the benchmark mid-swap rate. So far this year EDF raised about 4 billion euros of debt in total (without including the private placement.)

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