Scope rates TenneT Holding BV on a subscription basis. To view Scope’s subscription rating and rating report, or to register, please click here.

Tranche A, EUR 1.25bn with a 4.5-year maturity, is coming with a spread of 33bp over mid-swaps, against guidance of MS+35bp-40bp. Initial price thoughts (IPTs) were 60bp area. Demand for the shortest tranche was EUR 3.7bn, according to Bond Radar (www.bondradar.com).

Tranche B, EUR 1bn, has a 7.5-year tenor and is coming with a spread of MS+60bp, in line with guidance. IPTs were MS+75bp area. The book for this piece closed at EUR 2.3bn.

Tranche C, EUR 750m, has an 11-year tenor and a spread of MS+70bp, versus guidance of MS+75bp area and IPTs of MS+90bp area. Books closed at EUR 1.9bn.

Tranche D, a 20-year EUR 850m, had pricing fixed at MS+110bp, in line with guidance. IPTs were MS+130bp area. Orders for the longest-dated tranche were EUR 1.8bn.

In Scope’s January 2022 rating report, lead analyst on TenneT Holding Sebastian Zank pointed to increasing rating constraints stemming from persistent pressure on the entity’s key credit ratios such as leverage and debt protection amid growing capex and associated external funding needs.

“There is a material chance that persistently negative free operating and discretionary cash flow will lead to a sustained deterioration in key credit metrics,” Zank said. “While TenneT’s management and the government (the company’s sole shareholder) appear committed to retaining current credit quality, it is not yet clear whether funding over the next two years will be enough to strengthen the balance sheet and ease rating downgrade pressures.”

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