Iberdrola SA, the Spanish utility facing declining revenues in its domestic market, is seeking to reduce borrowing costs under a 3 billion-euro ($4 billion) loan pact signed in 2011, according to two people with knowledge of the matter.
Iberdola is asking lenders to increase a 1.5 billion-euro credit line and reduce the amount allocated to them in a more expensive 1.5 billion-euro term loan portion of the financing, said the people, who asked not to be identified because the information is private. The Bilbao, Spain-based company is offering to pay a 0.25 percent fee to lenders on any commitments they transfer, they said.
The term piece pays interest at 1.05 percentage points more than the euro interbank offered rate and the revolving piece pays initial interest at 0.7 percent, according to data compiled by Bloomberg. In a revolving line of credit, money maybe borrowed again once it’s repaid; in a term loan it can’t.
Iberdrola is asking lenders to make available to it until 2015 the option to extend the maturity of the financing by one year, said the people. Under the terms of the arrangement Iberdola may exercise this option twice until June.
Officials in Iberdrola’s Madrid-based press office didn’t immediately return a telephone call and an e-mail seeking comment.
The company has also been in talks with banks to refinance a 2.6 billion-euro revolving credit facility due December 2014, two people said last month. That loan pays initial interest at 0.75 percentage points more than Euribor, data compiled by Bloomberg show.
The utility is rated Baa1 by Moody’s Investors Service, BBB by Standard & Poor’s and BBB+ by Fitch Ratings, the second- and third-lowest investment grade levels, Bloomberg data show.
Iberdola said April 24 that first-quarter profit beat analyst estimates as growth in the U.S. and U.K. offset declining income at home.