Enel Selling $2.3 Billion of Hybrid Bonds Advances Europe Record

Enel SpA (ENEL) sold hybrid bonds in Europe where corporate issuance of the securities combining elements of debt and equity surged to a record $31 billion this year.

Italy’s biggest utility marketed $2.3 billion of notes in euros and pounds, according to data compiled by Bloomberg. Norwegian energy producer Statoil ASA (STL) issued its first bonds in euros and pounds since March 2009, while Spain’s Madrilena Red de Gas made its debut in the bond market.

Corporate bond issuance is surging after the summer lull, with non-financial borrowers raising 10 billion euros ($13 billion) of debt so far this week, after issuing 11.2 billion euros for all of August, according to data compiled by Bloomberg. The cost of insuring against losses on company debt held near a one-week low, with the Markit iTraxx Europe index of 125 companies with investment-grade ratings little changed at 104 basis points.

“Issuers are happy to come quickly while the market is receptive and demand is solid,” said Geraud Charpin, a fund manager at Bluebay Asset Management Ltd. in London, which oversees $55 billion. “The credit market is in good shape as supply has been limited in summer while demand remained strong.”

Two-Part Hybrid

Enel’s board of directors authorized a plan in May to sell as much as $6.5 billion of hybrid securities in euros, dollars and pounds by the end of 2014. The notes allow companies to borrow without putting their credit grade at risk because ratings firms typically count 50 percent of the bonds as equity, reducing their view of a company’s indebtedness.

A spokesman for Enel, who asked not to be named citing company policy, declined to comment on the sale.

The Rome-based utility sold 1.25 billion euros of notes to yield 6.75 percent that can be bought back by the company in January 2019. It also raised 400 million pounds ($622 million) from notes yielding 8 percent that can be called in September 2020. The sale came a day after America Movil SAB, Latin America’s biggest phone company, priced $2.8 billion of hybrid debt.

Statoil, based in Stavanger, Norway, raised the equivalent of $2.5 billion from bonds in euros and pounds. The company sold 850 million euros of seven-year notes and 650 million euros of 12-year bonds, as well as 350 million pounds of bonds maturing in April 2041.

Pozuelo de Alarcon, Spain-based Madrilena Red de Gas raised 500 million euros of notes through its Madrilena Red de Gas Finance BV unit. The five-year bonds yield 235 basis points more than swaps.

Financial Issuance

Also in the new issue market today, FCE Bank Plc, a unit of Dearborn, Michigan-based Ford Motor Co. (F), sold 500 million euros of three-year bonds yielding 78 basis points more than swaps.

Financial issuers included HSBC Holdings Plc (HSBA), which sold 1.5 billion euros of 10-year subordinated Tier 2 notes that can be redeemed in January 2019. Credit Agricole SA (ACA) has hired banks to arrange investor meetings for its first issue of contingent capital notes that will form part of the lender’s Tier 2 capital. France’s third-largest bank will meet investors in the U.S., Europe and Asia this week.

To contact the reporter on this story: Katie Linsell in Madrid at klinsell@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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