June 12 (Bloomberg) -- Enel SpA, Italy's largest utility, set initial terms on a sale of at least $4.7 billion of bonds denominated in pounds and euros to help fund its acquisition of Spanish rival Endesa SA.

Rome-based Enel, plans to sell the debt in five portions, according to a banker, who declined to be identified. It may sell more bonds, with the total capped at 5 billion euros ($6.7 billion), according to the banker. The extra yield premium, or spread, that Enel is offering in basis points is shown in the table below. A basis point is 0.01 percentage point.

Moody's Investors Service and Standard & Poor's both cut Enel's investment-grade credit rating this month after the utility bought almost 25 percent of Madrid-based Endesa. Enel also agreed on June 6 to pay $1.52 billion for Russian power company OAO OGK-5.

Enel hired Goldman Sachs Group Inc., Morgan Stanley, Credit Suisse Group, Deutsche Bank AG, UBS AG, and Royal Bank of Scotland Group Plc to manage the sale of the bonds.

Moody's cut Enel's credit rating one level to A1, its fifth-highest investment-grade ranking, and said it may cut the grading further. S&P lowered the company's rating one level to A, its sixth-highest ranking, the following day.

 Bond                Min. Size         Yield Premium in BPs

7-yr floating note   750 mln. euros   Euribor + `mid-high 20s'
10-yr fixed bond     1 bln. euros     Midswaps + `mid-high 30s'
20-yr fixed bond     750 mln. euros   Midswaps + `high 50s'
12-yr fixed bond     350 mln. pounds  Gilts + `mid 80's'
30-yr fixed bond     350 mln. pounds  Gilts + `mid-high 90s'

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

Last Updated: June 12, 2007 06:33 EDT