Energisa Perp Struggles

An NC5 perpetual bond Energisa priced yesterday struggled in the aftermarket. The $200m 9.5% coupon priced at par and was spotted at 98.5 – 99 at close. A banker on the deal said the book closed north of $300m. Investors expressed reservations about jumping in on the deal for the Brazilian electric distribution holdco due to the bond’s hybrid structure. The structure allows coupons to be deferred at any time in exchange for a 100bp step-up and the halting of dividend payments on equity. Though this hybrid structure is usually seen in a subordinated deal, this bond is senior. BAML, MS and Santander managed the issue, which was rated Ba2/BB minus.