According to Reuters, CEZ will sell bonds in the amount of EUR 500m today. The maturity is 7 years and the price is set to yield 45 bps over the mid-range of interest rate swaps. CEZ’s rating at Moody’s is A2 and at S&P for long-term liabilities A-.
Our view:
While the issue has been long awaited, it makes CEZ’s balance sheet more effective give its current debt/equity ratio of 0.3. At the same time, our WACC calculation would be reduced by 15b.p. to the average of 7.88% having a slightly positive impact on the valuation. CEZ will use proceeds to fund its expansion in the CEE and SEE region.