Corporate financing: Too big to survive?
One swallow does not make a summer. But following on from June’s quasi-CMBS deal by Tesco (CMBS: Tesco turns back the clock, Euromoney July 2009), July saw the launch of two structured financings backed by utility assets, one for Electricity North West, the other for Yorkshire Water. These are the first deals of their kind in Europe for some time. It is tempting to see these as a sign of a permanent thaw in the frozen securitization markets and a clear indication of a change in investor sentiment towards the asset class. But they might be no more than opportunistic trades dressed up as structured finance that are really very far from the kind of risk transfer usually associated with the concept.
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| orders for the ENW deal |
Both of the utility deals closed last month were the product of acquisition financings. United Utilities sold its electricity distribution network, ENW, in December 2007 to North West Electricity Networks for £1.78 billion ($2.9 billion). When the deal was signed the plan was to take out part of the debt via a structured financing in 2008.
