Eletrobras Circulates Bond RFP

Brazilian state-owned power company Eletrobras has put out an RFP for a $600m 10-year bond, say DCM executives. Proposals are due back to the company by April 2, which has bankers scrambling to get together a pitch. With Eletrobras’ relatively illiquid 7.75% of 2015s trading at around 102 to yield 7.36%, according to one sellside shop, a new bond could be priced in the 8.00% area, assuming a new issue premium of 50bp-100bp, speculates a banker. One DCM executive believes the company will award the mandate to up to 2 banks that can promise the lowest all-in cost. This sets the stage for a potentially ugly battle whereby bankers give up fee income for league table credit. But with bond deals few and far between this year, DCM shops are left with few alternatives. Eletrobras has approved a BRL30bn investment plan for 2009-2012. Of the total, the company says it already has BRL3.90bn in financing from the BNDES and Brazilian banks, and can use BRL10.9bn from its own resources. Another BRL6.1bn in financing, principally from BNDES and other multilaterals is currently being finalized, a spokesman said earlier this month. In November, Eletrobras said it would look to raise $400m in capital markets in 2009. Last year it raised $600m via a CAF A/B loan whose B portion was led by Citi, BNP and SocGen.