EEB Targets Low 6s

Empresa de Energia de Bogota (EEB) is set to price a $610m 10NC5 bond as soon as today after whispers were heard in the low 6% area Wednesday. Both EEB and Costa Rica’s ICE aim to pull the trigger today against what was a better market backdrop Wednesday. The split rated Baa3/BB+ Colombian utility is raising money to fund a call on its $610m 8.75% 2014 bond. With EEB’s outstanding bonds already trading around the call price, investors are largely comping against Empresa Publica de Medellin’s (EPM) 7.625% $500m 2019s, which have been trading around 5.10%. One investor said he would require a 25bp premium for EEB’s split rating versus the Baa3/BBB on EPM, plus another 50bp for EEB’s holdco status and perhaps some extra pickup to compensate for volatility. “I think that a 6.20% area should be ok, but maybe EEB can tighten from there if they have good momentum,” the investor adds. “At low 6% EEB looks good at 100 over EPM,” adds a portfolio manager. Even at 6.25% yield, investors say the deal would represent a juicy pick-up to the sovereign’s 10-year bonds which were trading at 3.60% Wednesday. Deutsche Bank and Santander are managing the sale. Last month, EEB launched a COP700bn ($360m) equity follow-on and is expected to upsize the deal to about COP770bn.