CEZ has selected Deutsche Bank and SocGen as managers for the sale of bonds. Note that at the beginning of the year, CEZ indicated that it may issue cEUR500m bonds while no other details like timing, maturity and the exact size have not been released yet. The bond issue is mean for expansion into the CEE&SEE region.
Our view: We remind that CEZ’s D/E stood at 0.27 at the end of 1Q06 (excluding reserves) while its total maximal indebtedness may reach up to 0.5 based on current loan contracts. CEZ’s free cash flow capacity by 2009 should reach some EUR2.2bn, which would allow the company to borrow over EUR3bn. The planned bond issue has been widely expected.