ENAP Seeks Tight Margin on New Loan

ENAP is seeking to pay L+80bp on a $300m 5-year loan, but many are wondering how much interest the Chilean state-owned oil company will lure at that level given the rising cost of funding at banks. “Considering that Deutsche Bank issued 2-year (debt) at around L+100bp, you wonder how many banks will be signing up for this,” says one DCM official. Indeed, higher funding costs mean that some institutions would take a loss at these levels, though banks with access to cheaper domestic markets may be able to justify such margins. “We need at least 100bp for dollar funding,” adds a loan banker. Future bond business may be an incentive, and the company’s quasi-sovereign status should bring some comfort, but on a standalone basis the credit isn’t particularly healthy, say bankers. “They have high leverage. Everyone expects the government to step in if need be, but there are no explicit guarantees,” says the loan banker. Leads Bank of Tokyo Mitsubishi, BBVA, HSBC and JP Morgan are offering MLA, arranger and manger tickets of $50m, $30m and $20m, with upfront fees 45bp, 30bp and 20bp, respectively. Commitments are due October 21.