Sponsored Content

Utility, Energy Lending Sees 20% 2005 Spark

Approximately $123 billion of loans were issued in the utility and energy sector last year, besting the 2004 activity by 18%. According to Dealogic, 226 deals were completed last year--not least of which was TXU Corp.'s $3.5 billion credit facility led by Citigroup and JP Morgan.

Sponsored by 
utilities-sunset.gif

Approximately $123 billion of loans were issued in the utility and energy sector last year, besting the 2004 activity by 18%. According to Dealogic, 226 deals were completed last year--not least of which was TXU Corp.‘s $3.5 billion credit facility led by Citigroup and JP Morgan. Sandip Sen, managing director for Citi’s North American power investment banking team, says banks are getting more comfortable lending money post-Enron Corp. “Post-crisis capital dried up and banks were a little more reluctant to lend money to companies, and I think once things started to settle down, banks were, and are, beginning to get more comfortable with lending back to the energy companies,” Sen says.

Citi led the bookrunner volume rankings last year with 27.1%, ahead of JP Morgan at 23.8%. “I think we’re looked at as an institution that is there to be supportive in good times and in bad,” Sen says.

Deal flow has been steadily increasing since 2002, when it bottomed out at 205 deals after declining since 2000 and the 235 deals done that year. The 205 loans issued in 2002 accounted for about $100 billion, but as the fall-out from the energy crisis and the Enron collapse settled, deals started to increase. Most of the capital provided over the past year was investment-grade, with $91 billion done in that area. Sen says the breakdown reflects the industry, as most power companies are investment-grade.

Bankers at JP Morgan did not return phone calls. Chris Schein, spokesman for TXU in Dallas, says the company does not talk about its credit facilities.