Goldman Sachs Group Inc. has been encouraging hedge funds to bet that Germany will be able to pull off an increasingly tricky takeover of the country’s biggest power grid valued at over €22 billion ($24 billion).
The bank has been offering to sell bonds issued by state-owned Dutch grid operator Tennet Holding BV in the last few weeks, when they were trading in the mid-80s, people with knowledge of the matter said. It’s flipping some notes to hedge funds by dangling the prospect of quick profits, telling them Tennet’s bond documentation indicates the securities might be redeemed at 100 if a transaction goes through, they said.
“Once the deal is announced, the Tennet bond-complex could be one of the largest rate-of-return situations in Europe,” Goldman wrote in a sales trading note this month. Several of Tennet’s bonds have language around “issuer substitution” that may trigger a change of control and repayment at their full value, according to the note.
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