Lenders Grapple with CFE Loan

Mexican electric utility CFE has made little progress on a $2bn 3-year senior revolver it launched roughly a month ago to arrangers. So far, the facility, which pays 40bp over Libor, is heard to have secured $100m commitments from just two MLAs. One of those is SocGen, say bankers away from the process. Fees for $100m tickets are 30bp, and for $150m tickets, 35bp. “Not everyone in the market is happy with the pricing,” says a banker close to the syndication. Indeed, a thin margin is heard to be the main cause for slow going on the transaction, in addition to harsh market conditions that jacked up the cost of funds for many banks. “Pricing is the rub for CFE,” says a banker whose shop is considering participating. While CFE is offering to pay well over the 25bp above Libor it sought last year, the margin is still viewed by many as tight given market conditions. The tension is healthy for the market, whose participants seek fresh benchmarks. A banker on the CFE transaction says he believes the deal will get done, and has managed to secure several statements of intention to commit from other banks. BBVA, RBS, BNP and Santander are bookrunners, with Citi also participating in a senior role. MLA commitments are heard due next week, with retail participation due in two weeks. The high grade borrower may have to play the relationship card, especially since Vale is sucking $50bn in liquidity out of the market to support its purchase of Xstrata.