EDP chose to sell the right to receive the accumulated tariff deficit in the year 2014. This is a form of energy fit money faster, although end up receiving a lower value for the tariff deficit.
EDP embedded EUR 500 million with the sale of part of the tariff deficit, 2014. The transaction was announced this Wednesday, March 18, the company announced in sent to the Committee on Securities Market (CMVM).
Energy says “2014 tariff deficit resulted from the deferral for 5 years of the recovery of 2014 related additional cost with the purchase of energy to the special regime (including 2012 adjustments and 2013). ”
Before this offer securitization, the tariff deficit due to EDP was around 1.25 billion, now reduced the amount to 750 million euros.
The Tagus will finance this operation by issuing 500 million of senior debt instruments, with a “yield” of 2% and coupon of 1.99%.
EDP so mandated StormHarbour, Banco Santander Totta , Deutsche Bank, London Branch and JP Morgan to carry out a credit securitization of the tariff deficit of Portugal.
This tariff deficit concerns the costs for maintenance of contractual equilibrium (CMEC) compensation of the State to EDP by early termination of various power purchase contracts in three dozen power plants.
The contracts were interrupted by the start of the wholesale electricity market in the Iberian Peninsula. These power purchase agreements (PPAs) guaranteed to the power a predictable revenue for electricity produced in these plants, mostly dams.
Securitization is a financial tool used to transform debt into investment, converting this asset illiquid securities in the capital market.
securitization transactions have been regularly used by EDP. In March last year, EDP embedded 750 million in March with the sale of a portion of the tariff deficit related to 2013.
On 15 December, EDP sold a portion of the Spanish tariff deficit the year 2013, fitting 202 million euros. Shortly after, on 22 December, the company fit more than 200 million by selling tariff deficit 2012.
EDP ended the session on Wednesday to gain 1.55% to 3.544 euros in the Lisbon stock exchange.
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