ENAP Plays Banks for Cheap Bilats

Chilean energy company ENAP has raised 3 bilateral loans totaling $300m from BNP Paribas, Santander and HSBC. The 3-year facilities, whose proceeds are being used to pay down maturing debt, are estimated to have come at an all-in cost to the company of around 213bp over Libor, say bank market officials. An ENAP spokeswoman says that figure is incorrect, but she declines to provide the actual number. If the pricing is at all in the ballpark, it would mark a recent low for 3-year money in the region. A banker whose shop was eyeing the process characterizes the pricing as “ridiculous,” because it was so tight. ENAP apparently employed a savvy borrower technique of pitting financial institutions against each other to whittle down pricing. In some cases, it took pitches from different internal lending groups at the same institution in order to source the lowest possible spread, say bankers. Some banks run bilateral lending and syndicated lending from different groups with separate returns targets. S&P this week cut Enap to BBB (stable) from A, noting the company’s high leverage and weak liquidity position. It also highlights the fact that the company has to import all of its crude oil and is exposed to commodity price volatility, as well as unstable refining margins, and increasing diesel imports to replace Argentine natural gas. Enap supplies about 80% of local market oil needs.