Despite the denial, market sources say that the deal will carry a coupon of 3.28% on a five-year tenor, equating to a spread of 47bp over Sibor. Details have not yet emerged for how much the issuer is looking to raise.
A source said that if the pricing is set at the speculated level, it looks a little tight given that local investors are not familiar with Enel and are being ultra-cautious in their investment decisions at the moment.
"Investors have not seen paper from a foreign utility company before so it could be tough to sell right now," one banker comments. "I think a lot of investors are being careful and have already closed their books already for the year. So a spread of 47 basis points is not going to look like great value for a company that isn't rated triple-A."
Enel is currently rated A+ by Standard & Poor's and Aa3 by Moody's — which hardly suggests it would be a speculative investment although the company does face difficult challenges however as the European energy market opens itself up to competition.
Enel must reduce its market share to less than 50% by 2003 according to a government ruling, so its longer-term standing depends on how well it can capitalize on opportunities outside of Italy.