Stressed Energy Distributor Brings ABS

Brazilian energy distribution company CEEE, whose credit metrics are under pressure, is in the local market seeking a BRL130m 6-year securitization. Final pricing for the bookbuilding process is expected next week. The FIDC, backed by future energy distribution contracts, was originally filed with the CVM in September, but has taken until recently to launch, owing to market conditions. A price ceiling has been set at IPCA plus 9.88%, says a company official, adding that the company hopes to tap at a lower cost if possible. The rate was established by adding 300bp to the 2015 NTN-B treasury note, he adds. The issue got a local AA rating from S&P, says the official. A structured finance executive away from the deal says regulated sector companies such as CEEE are able to use their very strong distribution agreements, backed by local law, to access funds, even though credit metrics of the operating company are weak. CEEE Ebitda fell 24% in 2008 from the previous year to BRL59.7m, according to its annual report. The company’s leverage is also substantial. Using short term financial debt plus supplier and long term financial obligations as the numerator, the company’s leverage ratio stood at 6.3x at year-end 2008. Itau BBA is leading the deal with UBS Pactual as co-lead and admin agent.