E.ON SE (EOAN), Germany’s largest utility, is seeking a 5 billion-euro ($6.8 billion) credit line to refinance an existing loan at a lower rate of interest, according to three people with knowledge of the matter.
The five-year revolving credit pact, which has two one-year extension options, will pay a margin of 27.5 basis points, or 0.275 percentage point, more than the euro interbank offered rate, said the people, who asked not to be identified because the terms are private. E.ON’s current 6 billion-euro credit line expires in October 2015 and pays a 47.5 basis-point margin, according to data compiled by Bloomberg.
E.ON is refinancing its debt as German investment-grade borrowers take advantage of competition among banks to lend to cut their interest costs. The company is offering to pay the same margin as German luxury-car maker Daimler AG, which obtained a 9 billion-euro revolving credit facility last week, Bloomberg data show. Deutsche Post AG (DPW), Europe’s largest postal service, raised a 2 billion-euro credit line today that pays a margin of 30 basis points more than Euribor.
Commerzbank AG and UniCredit AG are coordinating the transaction for E.ON and are currently marketing the debt to a wider group of lenders, the people said. The deadline for banks’ responses is Oct. 17. E.ON is rated A3 by Moody’s Investors Service and A- by Standard & Poor’s, according to data compiled by Bloomberg.
The Duesseldorf, Germany-based company, is offering a commitment fee, a payment on undrawn portions of the debt, equivalent to 35 percent of the margin, the people said. Lenders pledging $300 million will get an additional 27.5 basis-point up-front fee.
The revolving credit facility, a type of debt where money repaid can be borrowed again, includes a fee if it’s drawn, rising to 30 basis points if two-thirds of the credit line is utilized, the people said.
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