Panama's Elektra Noreste $100 million note issue awaits clarification on tax legislation

By Paul A. Harris

St. Louis, June 27 - With most new emerging market corporate bond deals sidelined by the recent sell-off in the market, Elektra Noreste, SA's $100 million offering of senior notes (Fitch: BBB) is poised to cross the finish line, an informed source told Prospect News on Tuesday.

However the Panamanian utility's deal has been hobbled by recent tax legislation from the National Assembly of Panama, which has some investors concerned.

The source said that the JP Morgan-led deal would have gotten done already were it not for the recent legislation, which, on the surface, appears to impose a capital gains tax on Panamanian securities. The source added that indications are the law was not intended to tax debt securities; however, wary investors are awaiting a clarification from the Panamanian tax authorities.

That ruling is expected soon, the source said.

The Elektra Noreste offering was marketed in a roadshow last week.

No maturity has been set, according to the source, who added that the tenor of the notes will be greater than 10 years. Nor has price talk been given on the deal, which the source characterized as being similar to a private placement.

According to Fitch Ratings, Elektra is one of three main electricity distribution companies in Panama and serves about 300,000 customers. The company's concession covers an area of about 29,000 square kilometers, which amounts to about 39% of Panama's territory and around 41% of its total population.

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