Rare EPM Loan Lures Banks

Colombian energy company, Empresas Publicas de Medellin (EPM) is generating considerable interest for its new $275m A/B loan after it held bank meetings in New York Monday to announce the deal’s terms. The borrower’s rarity value and its quasi-sovereign status are luring international financial institutions keen to participate in what is EPM’s debut syndicated loan. The $250m B loan pays Libor+187.5bp on a 5-year tranche and +215bp on a 7-year, both with 75bp commitment fees. For MLA tickets of $50m, participants receive upfront fees of 100bp on the 5-year and 130bp on the 7-year, 80bp and 105bp respectively for $25m tickets, 65bp and 85bp for $15m and 50bp and 65bp for $5m. “There are tickets from $50m to $5m so there is room for everyone, and there is also the option to pick how much banks want from the 5-year and the 7-year tranche,” said one banker. Now that Colombia holds two investment-grade ratings, EPM’s quasi-sovereign status is particularly appealing to loan bankers who haven’t seen a cross-border bank transaction from this country for quite sometime. Given the interest in the transaction, bankers would not be surprised if size grew to the $349m cap set earlier by the company. “Banks will be very underweight Colombia, so it will probably be significantly oversubscribed,” the banker says. The A/B loan structure and the support of the IFC, which is participating with $25m, are seen as necessary particularly for the longer 7-year tenor. The deadline for proposals is July 8. The loan is rated AA3 by Moody’s and BBB- by Fitch. Proceeds will go towards energy and water distribution. EPM in January raised COP1.25trn ($679m) through a global 2021 pricing it to yield 8.5%. The IFC is heard running the syndication, with no banks yet officially mandated on the B loan.