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Spain says sticking to tariff bond issue plans

Source: Reuters - Tue 26th Oct 2010

Spain's government said it is sticking to its planned November issue of tariff bonds to ease power groups' debt levels, despite telling securities regulator CNMV not to proceed with Tuesday's planned approval.

Planned regulatory approval of the long-awaited issue's prospectus was delayed due to technical factors but is expected very shortly, an economy ministry spokesman said.

"The prospectus is about to be approved, we haven't gone back on anything, it is a question of procedure" he said.

Spain's government hopes the issue of tariff bonds will ease a more than 14 billion euro ($19.5 billion) deficit between retail power prices and power generation and supply costs, run up by utilities over the last 10 years.

The deficit, which swells utilities' debt levels already inflated by a slew of acquisitions, could ease power group's borrowing costs if removed.

The shortfall has widened with Spain's focus on expensive renewable energy and the extra capacity and power grid reinforcements it requires, and was 20 percent higher than energy sector regulator CNE's estimates in the first six months of 2010.

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