Fondo de Amortizacion del Deficit Electrico, also known as FADE, the securitization vehicle set up to fund the tariff deficit in the Spanish power industry, is planning to sell €125 million ($166 million) worth of bonds.
Moody’s Investors Service has assigned a provisional rating of ‘(P)A1’ to the offering, which constitute an increase in the total amount of series 2 notes issued in February 2011.
The rating of the notes is fully linked to the rating of the government of Spain, which provides an unconditional, irrevocable, legal, valid and binding guaranty on the transaction.
If the government of Spain failed to make the required payments under the guaranty, this could trigger an event of default if the management company considered this course of action in the best interest of the noteholders.