Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Enel Russia, PJSC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
Moody's Investors Service ("Moody's") has today assigned a Ba1 long-term rating to the junior subordinated Capital Security (the "Hybrid") to be issued by ENEL S.p.A. ("Enel"). The Ba1 rating assigned to the Hybrid is two notches below Enel's senior unsecured rating of Baa2, reflecting the features of the Hybrid. It is very long-dated, deeply subordinated and Enel can opt to defer coupons on a cumulative basis.
(Bloomberg Opinion) -- It’s important in the fashion world to make a big entrance and Chanel is doing just that with its inaugural 600 million-euro ($700 million) bond. It has chosen to issue debt that’s linked to environmental sustainability targets; the bond includes a penalty if the company doesn’t live up to its green goals.The famous French luxury brand — headquartered in London now — is showing up its British rival Burberry, whose sterling-denominated sustainable bond last week was a regular green issue. That one won’t incur any penalty for failing to hit its environmental targets.In attaching green strings to its bonds, Chanel is following the example set last year by Italian utility Enel SpA and more recently Novartis AG, a Swiss drugmaker. The five-year tranche will repay at 100.5% of face value on maturity if the company isn’t wholly reliant by then on renewable electricity, and the 10-year tranche will cash out at 100.75% if Chanel falls short on its greenhouse gas emission targets.The company is to be applauded for avoiding the “greenwashing” criticism that can be leveled at other so-called sustainable bonds. It achieved “carbon-neutral” status last year as part of its efforts to support the Paris climate change agreement.Chanel is interesting in that it doesn’t have a credit rating and it probably won’t be eligible for the European Central Bank’s and the Bank of England’s giant bond-buying programs (the company is based outside the euro area and yet the debt was issued in euros). As things stand, Chanel’s U.K.-issued notes won’t benefit either from the ECB’s plan to start buying sustainability-linked bonds next year. But it was still able to cut the coupon on offer during the sale process, and it secured strong demand anyway. Appetite for any kind of yield is still fierce among debt investors, and Chanel is a prized name for a debut bond sale.While coronavirus has taken a toll on the luxury industry, Chanel is in fashion’s premier league with more than $12 billion of net sales in 2019. The bond market has rewarded that. The price on the deal’s five- and 10-year maturities was tightened by 25 basis points to 95 and 125 basis points over their respective benchmarks, giving an implied rating that’s comfortably within the investment-grade bucket. Demand for the bonds was respectable at nearly three times the deal size.Having previously relied on private debt and bank loans, Chanel is coming to the public markets to refinance some of the 600 million pounds ($765 million) of Covid loans it has repaid to the BOE. So we probably shouldn’t read too much into what the bond debut says about the controlling Wertheimer family’s plans for the company. There has been speculation (denied by the Wertheimers) about an initial public offering or sale. Even if that isn’t the intention, it doesn’t hurt to have a profile in the debt markets.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.