Iberdrola Said to Offer $2.8 Billion Refinancing Loan to Lenders

Iberdrola SA (IBE), Spain’s biggest utility, is syndicating a 2 billion-euro ($2.8 billion) credit line that will replace a facility that matures next year.

The five-year financing will pay an initial interest margin of 90 basis points, or 0.9 percentage points, more than the euro interbank offered rate, according to two people with knowledge of the debt, who asked not to be identified because the terms are private. Banco Bilbao Vizcaya Argentaria SA (BBVA) is arranging the credit pact for the Bilbao, Spain-based business.

Iberdrola is replacing its 2.6 billion-euro revolving credit facility, a type of debt where money repaid can be borrowed again, as Spain exits a two-year recession and Europe’s most creditworthy companies get the lowest borrowing costs for five years. The interest margin paid by the region’s investment-grade borrowers has fallen to an average of 61 basis points this year, the lowest since 2007 when they paid an average of 75 basis points, according to data compiled by Bloomberg.

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

The company is also selling 500 million euros of eight-year bonds today. The notes are priced at 138 basis points more than mid-swaps, a person familiar with the matter said.

Iberdrola is rated Baa1 by Moody’s Investors Service and an equivalent BBB+ at Fitch Ratings, Bloomberg data show. Standard & Poor’s rates the company one step lower at BBB.

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net

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

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