Italian natural gas infrastructure company Snam is one of Europe’s leading providers of storage, transportation and regasification, with some 40,000 kilometres of pipeline and 19.5 billion cubic metres of storage capacity. Its key role in energy markets means Snam is highly regulated in respect of its tariffs and returns. As such, it requires a sophisticated approach to balance sheet management as it aims to keep its cost of debt below regulatory targets.
Since the company’s demerger from Italgas in 2016, Snam has embarked on a series of liability management exercises with a view to extending its debt profile, reducing long-term financing costs and increasing fixed-rate exposure. The company dropped some of its expensive credit lines, unwound derivatives and in late 2016 spent some €3.1bn buying back bonds (€2.75bn in nominal terms) with an average coupon of about 3.3% and average maturity of about three years, in what was Europe’s largest ever investment grade corporate bond buyback.
