EPM Looks for Diversity with Loan

A need to diversify funding sources has Colombian quasi-sovereign utility Empresas Publicas de Medellin (EPM) turning to the loan market for the first time, CFO Oscar Herrera tells LatinFinance. “This is a new source of funding for us. In the past year we have had interest from many banks wanting to do this type of transaction,” he adds. The company wants to raise $275m through an A/B loan structure. “This is a good moment, there is a lot of liquidity and good financial conditions,” Herrera says. Commitments are due July 8 for the $250m 5 and 7-year B portion. The IFC $25m A structure makes the 7-year portion possible, Herrera confirms. There is interest from about 25 banks, including a few regional lenders, and Herrera says the transaction could be upsized to the $349m cap established for the project. Bankers echo such sentiments, saying that an upsize is a very real possibility thanks to a strong interest in Colombian paper and the need to diversify portfolios. 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. The loan is rated AA3 by Moody’s and BBB- by Fitch. Proceeds will go towards investments in energy and water distribution.