Spanish utility Iberdrola has become the latest victim of the credit crunch.
Bilbao-based Iberdrola has been forced to delay a bond issue and seek a one year extension of £7 billion of loans it took out to finance its acquisition of ScottishPower which completed on April 23.
The Royal Bank of Scotland, Barclays Capital and ABN Amro are reported to be negotiating terms to extend the maturity on these loans for one year beyond February 2008.
Iberdrola is also seeking a €3 billion (£2bn) credit line to tide itself through a rocky patch in the credit markets.
In June Iberdrola said it would sell bonds or longer term loans to refinance the debt used in its £12bn acquisition, but the subsequent surge in borrowing costs made it rethink the planned issue.
Ken Brown, managing director of fixed-interest specialist Sutherlands Edinburgh, said: “With markets remaining volatile and the uncertainty over Iberdrola’s credit rating, they probably fear they might end up being shunned if they were to make [the bond issue] on one of the bad days.”
Both Standard & Poor’s and Moody’s have warned they may cut the utility’s rating.
An Iberdrola spokesman was unavailable for comment. RBS confirmed Iberdrola is a client but would not comment.
Ignacio Sanchez Galan, Iberdrola’s chairman, has said that the company’s planned €20 billion IPO of its renewables business – Iberdrola Renovables – will be on December 12.
This article was published in The Sunday Times on 21 October 2007