The long-running saga of the tariff deficit in Spain and attempts to securitize it took another twist in the form of a government guarantee.

The Spanish government has mandated BBVA, BNPP, Credit Agricole CIB, Deutsche Bank, Goldman Sachs and Santander for the upcoming electricity deficit securitization, Thomson Reuters reported this week.

However, after a decision to delay a tariff hike that would have seen customers paying an extra 4% on elcetricity bills, there were some concerns that the deal would not be able to go through.

The government is currently looking to offer a double guarantee which, when combined with final customers' cash flows, might attract enough interest because utility balance sheets will look a lot more solid, Unicredit analysts said.

"Under normal circumstances, this would be the end of the story, but due to the sovereign debt crisis the outcome is still far from certain, while the implications of success or failure are bigger than ever," the analysts said. "If the securitization of the tariff deficit is completed in full, this would clearly help to strengthen the companies' balance sheets, but so far there is still uncertainty."

The size of the tariff deficit securitization fund is potentially about €20 billion ($24.7 billion), split into €10 billion for the 2001-2008 period, and an additional €9.5 billion for 2009-12, Reuters reported.

Meanwhile, other European deals in the market include Dexia privately placing two out of four tranches of its €6 billion Belgian RMBS called PENAT 2010-3.

The Class A1, which was rated 'AAA' and worth €2.25 billion, had a 1.85-year weighted average life. The tranche priced at nine basis points over three-month Euribor.

Class A2, which was rated 'AAA' and worth €3.2 billion, had 4.06-year weighted average life. It priced 110 basis points over three-month Euribor.

RCI Banque Germany, with Credit Agricole and Societe Generale as leads, is coming to market with a €873 million of Class A notes. These are rated 'AAA' and have a 1.78 weighted average life at one-month Euribor.

Cars Alliance Germany 2010-1 is in the pipeline, and is expected to start its roadshow next week.

Preliminary details on the Car Alliance deal are available via the link below from ASR Scorecards database.

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