Italian utility Enel SpA (ENEL.MI) is talking to banks about an EUR8 billion loan to refinance part of the EUR35 billion debt used to back Enel's takeover of Spanish peer Endesa in 2007, people familiar with the situation said Wednesday.

The new loan under discussion has a maturity of five years and is priced at an initial 85 basis points above Euribor, with pricing linked to a ratings grid, one of the people said.

Banks are being offered a 40 basis points commitment fee, and a 50 basis points utilization fee if more than 50% of the loan is drawn down, the person added.

Banks are being invited to participate with commitments of EUR300 million and EUR500 million, a second person said.

Mediobanca is acting as co-ordinator in the process.

Enel tapped the bond market in February when it sold EUR3 billion in bonds to retail investors in various European countries. The issue size was raised to EUR3 billion from EUR2 billion when the deal was heavily oversubscribed.

Enel raised EUR2 billion through a six-year bond offering with a nominal yield of 3.52% and raised EUR1 billion through the sale of floating-rate notes with a yield of 73 basis points above six-month Euribor.

Proceeds of these bond issues was used for general corporate purposes and to refinance the company's existing debt, as previously reported by Dow Jones.

In recent years, Enel turned into Europe 's most-indebted utility after an international shopping spree, which included acquiring Spain 's Endesa SA (ELE.MC). Enel's net debt at the end of December was EUR51 billion.

Enel is rated A- by Standard & Poor's, A- by Fitch and A2 by Moody's.
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