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E.On: turned on funding taps in 2007 |
Although E.On is one of the best-known utilities in Europe, it went five years without issuing a major bond in the capital markets. All that was to change in the middle of 2007, when it announced a €30 billion investment initiative, the financing for which needed to be raised by 2010. “The euro market was closed for much of 2008 – it was a really difficult year. Sometimes the market was only open for a few days at a time,” says Verena Volpert, head of finance at E.On.
What does it take to be a good borrower? For a good many months the answer to that question was relatively simple: to have maintained an investment-grade rating. But the message from the top issuers is more subtle than that. The focus of the credit crunch has understandably been on the travails of the investment banks, but behind the scenes the impact on the treasuries has also been dramatic.
“In the middle of 2007 we were well aware of the sub-prime crisis and that we were about to come with a huge funding programme. We knew we had to change and become a frequent issuer,” says Volpert.
“We thought about it quite carefully. We then started a debt workshop to work out how to manage this activity. The major message was that the principle strategy should be diversification. That was at the top of the E.On agenda. Make use of as many different markets, different investors, different currencies and different instruments.”
