CEZ sold bonds in the amount of EUR 500m on Friday at 4.125% due in 2013 yielding 62.8 bps more then Government bonds. 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 15 bps 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.