EPM to Seek Funding Next Year

Empresas Publicas de Medellin’s financing needs are covered over the next year, but during the second half of 2012, the Colombian quasi-sovereign utility will start to seek additional funding in both the international and local bond markets, CFO Oscar Herrera tells LatinFinance. The borrower intends to become a frequent issuer in the foreign markets after raising COP1.25trn ($679m) in January when it sold a 2021 global peso bond at 99.170 with an 8.375% coupon to yield 8.50%, Herrera adds. That transaction marked its second among international investors, with the first being a $500m 7.625% 10-year that was issued in 2009 via BAML and JPMorgan. “We will do pesos or dollars according to our needs,” he says. For the next year the company only needs to raise another $500m to cover its $800m-$1bn capex plan for 2012, but it may require more for acquisitions. “We are taking this year to consolidate the acquisitions we have made, but in 2012, we will be looking for new acquisitions in the region and that will probably need additional funding,” Herrera says. In late 2010, EPM bought Guatemalan distribution utility EEGSA for $605m in cash, plus the assumption of existing debt. Herrera doesn’t discount the possibility of tapping local markets outside of Colombia if it were to make more cross-border purchases. The company is targeting assets mostly in Central America, except for Nicaragua, but it is also eyeing Brazil, Chile and Peru. “If we were to make an acquisition in Chile or Peru, those markets are very good for raising funds at good spreads, but in Brazil it is different given the higher cost of debt,” Herrera adds.