Enel has successfully initiated the placement of a hybrid bond in two tranches. The Italian energy multinational has launched on the European market the issue of non-convertible bonds, perpetual hybrid subordinated bonds denominated in euro, intended for institutional investors, for a total amount equal to 1,75 billion euros. Boom in orders: the issue received oversubscription requests more than 8 times, amounting to approximately 15 billion euros. The new securities will be listed on the regulated market of the Irish Stock Exchange (Euronext Dublin).
Meanwhile the title travels down on the Ftse Mib in the morning: it yields more than 1% to 5,54 euros.
The new loans will allow the group led by Francesco Starace to refinance the maturities of some outstanding hybrid bonds. Enel's board of directors had recently authorized the issue, by December 31, 2023, of one or more non-convertible bonds, in the form of hybrid subordinated securities, including those of a perpetual nature, for a maximum of 2 billion euros, to be placed exclusively with European and non-European institutional investors, also through private placements.
Enel's new hybrid bond
The new issue is structured in two series:
- bond loan from one million euros non-convertible hybrid subordinated perpetual, with no fixed maturity, payable only in the event of winding-up or liquidation of the company, with a fixed annual coupon of 6,375% paid until the first reset date (excluding) of 16 July 2028, which corresponds to the last day for the first optional redemption;
- bond loan from 750 million euro non-convertible hybrid subordinated perpetual, with no fixed maturity, payable only in the event of dissolution or liquidation of the company, with an annual fixed coupon of 6,625% paid until the first reset date (excluding) of July 16, 2031.
The operation is aimed at refinancing two hybrid bonds and, as the company points out in a note, is in line with Enel's financial strategy outlined in the 2023-2025 Strategic Plan, which reaffirms the Group's commitment to maintaining hybrid bonds as a permanent component of its capital structure.
To manage the placement a pool of banks composed of: Bank of America, Bnp Paribas, Crédit Agricole, Citi, Deutsche Bank, Goldman Sachs, HSBC, IMI-Intesa Sanpaolo, JP Morgan, Mizuho, Morgan Stanley, Mufg, NatWest, Santander, Société Générale, Smbc and UniCredit.
Enel's hybrid bond: the judgments of the rating agencies
Moody's assigned the long-term rating Baa3 to the two bonds, i.e. two notches below Enel's senior unsecured rating of Baa1, reflecting the characteristics of hybrids. “They are very long-term, deeply subordinated and Enel can opt for the cumulative postponement of the coupons – reads the rating agency's decision -. The rating is in line with that of the company's existing hybrid notes."
The negative outlook mirrors that on Italy's Baa3 sovereign rating, "reflecting the company's vulnerability to adverse macroeconomic developments and sovereign ties, given that a substantial portion of its earnings are generated in Italy," the statement said.
Fitch instead assigned the long-term rating “BBB-” to the titles. The same as S&P Global Ratings. “We view this transaction as a liability management transaction that will allow Enel to replace, subject to the final amount raised, part of its existing 750 million, 2,5% hybrids callable for the first time in August 2023 and part of its USD 1,25 million, 8,75% hybrid notes (EUR 936 million traded) callable in September 2023,” the rating agency said.
Repurchase outstanding bonds
Furthermore, Enel has launched some voluntary offers to repurchase in cash all or a portion of the outstanding $750 million hybrid perpetual bond, with a first call date of August 2023, as well as a portion of the outstanding $1.250 million hybrid perpetual bond, maturing September 2073 and earlier call date in September 2023, for a total nominal total of the two hybrid bond loans equal to the amount raised with the new perpetual hybrid issues launched yesterday, Monday 9 January, subject to the occurrence of certain conditions precedent.
The tender offers (offer to purchase a company's shares at a price generally higher than the market price) were supported by a consortium of banks in which Bank of America, Bnp Paribas, Citi, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley and NatWest have acted as dealer managers.
Salvini thunders (again) against Starace
"We have inherited a not brilliant situation," said the Minister of Infrastructure and Transport, Matteo Salvini, on the sidelines of an event in the Brescia area. "In the panorama of large Italian companies, there are critical situations, I am thinking of the situation of Tim and Enel, which must absolutely be paid attention to, evaluated and accompanied". So Enel's number one appears destined to succumb in the great merry-go-round of the nominations of the subsidiaries, which will be conducted by the Meloni government in the spring. “They need a great medium-long term plan, which has evidently been lacking in the last period,” concluded Salvini. But the new bond denies the minister's accusations.
